Tag Archives: CSR


Form CSR – 2, notified vide GSR 107(E) on 11 February 2022, is on our desk to fill and file. If you have missed the information overflow, the last date for filing the same for the financial year ended on 31 March 2021 is 31 March 2022. I am not sure of the mechanism, but it may be an attachment of Form GNL – 2.

It seems next year onward; this will be an addendum, not the attachment, to Form AOC – 4/ AoC – 4 XBRL/ AoC – 4 NBFC (Ind AS).

Notification GSR 107(E) on 11 February 2022

We cannot wait but to prepare the data to fill for all of our valuable clients – every company covered under the provisions of sub-section (1) to section 135. Please refer to the newly inserted Rule 12(1B) of the Companies (Accounts) Rules, 2014.

List of Documents for support:

  • Copies of Audited Balance Sheet of last three financial years;
  • Form AOC – 4/ AoC – 4 XBRL/ AoC – 4 NBFC (Ind AS) filed for the financial year [referred hereinafter as AOC-4];
  • Form MGT – 7 filed for the financial year;
  • Paid Challan for Form AOC – 4/ AoC – 4 XBRL/ AoC – 4 NBFC (Ind AS) filed for the financial year [referred hereinafter as Challan];
  • Latest Board Resolution constituting CSR Committee;
  • Constitution of CSR Committee;
  • Minutes of CSR Committee Meetings held during the financial year [FY 2020-21;
  • Company Website with Compliance menu and CSR Tab thereunder;
  • Impact Assessment Report of each CSR Project;
  • CSR Ledger and CSR Bank Account Statement for the financial year;
  • Bank Statement of Unspent CSR Account for previous three financial years;
  • Annual Action Plan CSR for the last financial year; and
  • The Implementation Reports for each of the CSR Projects as on 31 March of the financial year with minutes of the CSR Committee meeting considering the same [For all projects completed during the last financial year or ongoing as on 31 March of the financial year].

Information to Fill:

The net worth, turnover, and net profit data should be the same as Form AOC – 4 filed for the financial year.

Meeting details of the CSR Committee should confirm the details from the latest Board Resolution constituting the CSR Committee and Minutes of the meeting of CSR Committee held during last Financial Year.

The Impact assessment report should be on your desk for confirmation and on the company’s website at least before you fill out the Form. The weblink should be in working condition. I am not sure if the link’s implication got broken in the future. Therefore, it is advisable to attach the report with the Form.

The set-off amount should be taken from the balance sheet or confirmed by your auditor.

The company should confirm CSR obligation with audited balance sheets of the last three financial years.

Details of each (A) Ongoing project started in previous years completed in Financial year, (B) Ongoing project started in previous years still not completed in Financial year and (C) project initiated and completed during the Financial Year:

  • Project ID;
  • Item number from Schedule VII – CSR Schedule;
  • Name of Project;
  • Local Area – Yes/No;
  • Location of the Project – State and district
  • Project duration in months;
  • Amount spent during the financial year;
  • Mode of implementation – direct or indirect;
  • Name and CSR Registration Number of the Implementation Agency;
  • Amount paid on administrative overhead
  • Amount spent on impact assessment
  • Total amount spent during the year
  • Amount spent more than the obligation;
  • Amount unspent; and
  • Amount transferred to the Scheduled Fund.

Details of Unspent Fund for the financial year:

  • Details of the amount transferred to Unspent CSR Account; and
  • Details of the amount transferred to Scheduled Funds.

Details of the amount spent in the financial year from the unspent fund of previous three financial years

  • Year-wise amount transferred to Unspent CSR Fund;
  • Year-wise balance of the amount transferred to Unspent CSR Fund;
  • Amount spent in the financial year;
  • Amount transferred to Scheduled Fund; and
  • Year-wise Remaining amount for the year.

Initial Impact assessment of CSR-2

The Form is my hate of first sight due to the complication of data required. Please get the filled Form vatted by a qualified professional, including auditors. In addition, the Form is so demanding it will be easier to transfer your social responsibility amount to the Government pet funds listed in Schedule VII.

The government is pretending to promote and protect the MSME Sector. A Company with a turnover of less than 100 Crore and investment in plant and machinery of less than 20 is an MSME company. Good numbers of MSME companies are CSR companies. These companies do not have an efficient mechanism to undertake and implement CSR projects. With the present detailed Form, we are opening gates for tax assessment like monitoring social contribution. With the implementation of burdensome Form, we are forcing MSMEs to transfer funds to certain government-sponsored funds. These funds have doubtful answerability towards constitutional auditors (CAG) and constitutional stakeholders (the parliament).

Tax terrorism must be an ancient term by now. Social services are not voluntary anymore but increasingly subject to regulatory control and reporting.

In continuation of my earlier appeals, I beg ease of doing CSR. Please believe in your people and corporate citizens. But unfortunately, the compliance, reporting, monitoring and prosecution cost will be higher than possible leakage. Therefore, society will not get benefits from being overburdened.



Indian laws are interesting phenomena incrementally so in recent years. It is like the king’s wishes. If king pronounces a desire it will be treated as law and will of God. Procedure to convert that desire formally to the law may be complied with in a due course. Any donation made by a company till 26th May 2020 was not legally a CSR contribution except under ages-old pre-democracy principle of king’s wishes. Now, due course of law-making granted king’s wishes its due legal status retrospectively.

Schedule VII of the Companies Act, 2013 which list out items which might be considered as CSR may be amended without parliamentary node by way of Notification issued by concerned Joint Sectary of the Ministry of Corporate Affairs. Practically it requires official approval from concern Minister. Mere wishes of the Minister or even of the whole cabinet are not enough to change a legal position.

In the present case, Prime Minister announced a new but controversial fund almost parallel to existing and well settled “Prime Minister’s National Relief Fund”. New fund is named as the “Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund)”.

The major difference in both PM funds is the audit – previous one is to be audited by a constitutional authority – Comptroller and Auditor General of Indian (CAG) which place its audit report to Public through the Parliament of India – called as the temple of Indian Democracy by the present prime minister. On the other hand, newer one is to be audited by a Chartered Accountant firm of choice of the fund and the audit report shall largely be a private affair of the fund. Hopefully, the second one shall be made public under federal transparency law called the Right of Information Act, 2005. However, nothing is clear as of now.

As soon as Prime Minister of India announced this Fund and requested contribution to this fund as part of Corporate Social Responsibility, money starts pouring into this fund. But where was the law? No due diligence was made either by the Government at the time of acceptance of the Fund as CSR nor by contributors. India particularly Corporate India has a long history of pleasing the ruling king then the compliance of the law. This was one fit case.

Soon, auditors of the contributing companies start raising queries. A national but silent whistle was blowing which was a wakeup call for the Government.

Now the notification read as under:

  1. (the number is actually missing, a familiar typo) In Schedule VII, item (viii), after the words “Prime Minister’s National Relief Fund”, the words “or Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund)” shall be inserted.

  2. This notification shall be deemed to have come into force on 28th March 2020.

What it actually convey? No company contributing to the fund since 28th March 2020 till 26th May 2020 is good in legal interpretation. These companies receive no proper legal advice despite hiring big law firms. They actually do not care about the written law as they understand and believe the king’s wishes are law after all.

No, I have no issue with the king’s wishes as long as it gives a positive result to the society and the Nation. Read paragraphs hereinabove in a lighter tone and just for legal understanding only. We all know this was actually a hard time for Ministers and Secretaries working on various relief packages. It was appreciable work when a good number of government officers was working from home.

Take inspiration and stay at home as far as possible. Work from Home is a buzz word.

Aishwarya Mohan Gahrana

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Donation to National funds

Corporate Social Responsibility becomes a bureaucratic and political method of harassment for Indian companies. It was introduced under “comply or explain” regime but now companies start receiving notices for not complying even if there is an explanation. Without any significant exception, authorities are finding explanations offered by companies inadequate. Recent reports suggest, CSR will virtually be a “comply or deferred comply” regime soon. Now, all critics of law backed voluntary corporate social responsibility now stand correct. Indian companies are facing “voluntarily compulsory” Corporate Social Responsibility, “Transparently Opaque” Electoral Bonds, “politely requested” political donations, as an extension of “extortionist” taxation system.

Before criticizing me for writing a hardcore anti-establishment post at this time of the general election, please check voting pattern of parties inside the parliament and tell me the difference of opinion among political parties on such legal loot. All are the same.

When I last checked Schedule VII of the Companies Act, 2013 as amended four times before being in present form, donation seems to be the best method of corporate social (ir)responsibility. Else a company may choose to fund a project established either by a well-connected politician, bureaucrat, businessperson or goon.

Present Schedule VII of the Companies Act, 2013 recommends the following funds –

  1. Swach Bharat Kosh;
  2. Clean Ganga Fund;
  3. Prime Minister’s National Relief Fund; and
  4. Any other fund set up by the central govt. for socio-economic development and relief and welfare of the scheduled caste, tribes, other backward classes, minorities and women.

Making a donation to these government funds are safe as it requires no planning, no responsibility, no social engagement, no notice, no worries, no explanation.

However, the concept of asking fund is nothing new.

Section 181 of the Act permits a company to contribute to Bona Fide and Charitable Funds etc.

Section 183 of the Act permits a company to contribute to the National Defence Fund or any other Fund approved by the Central Government for the purpose of national defence. I am happy to note in even in this hyper-nationalist and super patriotic time such donation to defence funds are not qualified to be a Corporate Social Responsibility.

Indian companies also permitted to make one more type of donation. This is under The Companies (Donations to National Funds) Act, 1951 (Act 54 of the year 1951). This forgotten Nehru era law came into force on 17th October 1951 and still operative with an objective to enable companies to make donations to national funds.

The Companies (Donations to National Funds) Act, 1951 has only one operative Section. Section 4 of this Act[1] permits Indian companies to donate to –

  1. the Gandhi National Memorial Fund;
  2. the Sardar Vallabhbhai National Memorial Fund;
  3. any other Fund established for a charitable purpose which by reason of its national importance has been approved by the Central Government for the purposes of this section.

It seems nothing was yet notified any other approved fund.

There is another law passed by the state of Gujarat referring to the Gandhi National Memorial Fund (Local Authorities Donations) Act, 1953. There is little information about this fund. Some source suggested that with an amount of $130 million it was once “perhaps the largest, spontaneous, mass monetary contribution to the memory of a single individual in the history of the world.

Sardar Vallabhbhai National Memorial Fund seems to have the same fate now. We have a great statue in the name of the great leader.

This Act is now a law in a legal coma due to a need for political correctness and corporate irresponsibility of few time donations.

I am referring to such a history of legally backed corporate donations to national funds to prove my point. This is the worst method to be socially responsible.

{Note – bura na mano holi hai – take it easy on Indian festival Holi}

[1] Section 4 of this Act read as under –

Any company may, notwithstanding anything contained in the Companies Act or in any other law for the time being in force regulating the affairs thereof, and notwithstanding that the memorandum or articles of association of the company do not enable it so to do, by an extraordinary resolution passed in accordance with the provisions contained in section 81 of the Companies Act, authorise the making of donations to the Gandhi National Memorial Fund or the Sardar Vallabhbhai National Memorial Fund, or to any other Fund established for a charitable purpose which by reason of its national importance has been approved by the Central Government for the purposes of this section.

AMENDMENT: Administration of CSR

In a post earlier here, we discussed provisions of Section 135 read with rule 4 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 regarding Administration of Corporate Social Responsibility Policy. Sub – rule (2) of rule 4 allow board of directors of a company to choose among various options, a better option to administer the CSR Policy. This rule 4(2) was slightly amended by the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2015. We discussed those amendment rules earlier here.

Now, a gazetted notification published on 23rd May 2016 in Official Gazette of India, which came into force from same date; amend sub – rule (2) of rule 4.

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On 1st February 2016, Ministry of Corporate Affairs uploaded the report of Companies Law Committee on its website here. In 4th post on this report, we will discuss recommendations of the committee related to shares, debentures, general meeting, NFRA, Board Report, CSR etc.

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The High level Committee constituted by Ministry of Corporate Affairs to suggest measures for improved monitoring of implementation of Corporate Social Responsibility Policies by the companies under Section 135 of the Companies Act, 2013 has submitted its Report to the Government. A copy of report is available here.

We will summarily discuss recommendations of the committee in this post.

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General Circulars on CSR

As we discussed in last post here, government bringing changes in CSR law frequently. With all these development nightmare of CSR may become tax seems to be true soon. In this post, we are discussing General Circulars issued by Government in relation to CSR during first year. There are three circulars General Circular 21/2014 dated 18th June 2014, 36/2014 dated 17th September 2014 and 01/2015 dated 3rd February 2015.

General Circular 21/2014 enumerates following rules for interpretation of CSR Schedule VII of the Companies Act 2013:

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Journey of CSR Schedule in 2014

This is being said in corporate sector, the companies Act 2013 is being treated by government and corporate as CSR law. The schedule related to corporate social responsibility has been amended since its being come into force.

Original CSR Schedule read as under:

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Liberal Interpretation of CSR Schedule

Newly born Indian Corporate Social Responsibility Law is subject to a debate too hot to have it, too tasty politically, socially and economically to avoid it.

In a recent general circular 21 of 2014 dated 18th June 2014, Government of India urged that “the entries in the said Schedule VII must be interpreted liberally so as to capture the essence of the subjects enumerated in the said Schedule.”

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CSR Policy; Publication and Reporting

CSR policy of Indian companies may have more similarities than any other thing. Section 135 read with Schedule VII of the companies Act 2013 decide four corner of CSR policy of Indian companies, which is guided by and supplementary to development vision of Government of India.

Corporate Social Responsibility committee is primary body to formulate and recommend the CSR policy and expenditure thereon. The committee also has to monitor CSR policy implementation and logically expenditure thereon. The Board of a company may approve the policy and budget allocation for different aspect of CSR initiatives.

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CSR Administration in India

In my recent post on CSR last week, I discussed definition and scope of Corporate Social Responsibility in India after recently notified Rules. Now, I will discuss administration of Corporate Social Responsibility in India.

The Corporate Social Responsibility Committee of the Board of the Company is responsible for administration of Corporate Social Responsibility of the company. The committee shall consist of three or more directors, out of which one shall be an independent director. This provision is equally applicable to all companies including private or small companies.

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Applicability of CSR Law

Newly enacted CSR law is not applicable to all companies. Sub – Section (1) of Section 135 is applicable to all companies; subject to limitation based on its net worth, turnover and net profit. These threshold limits are:

  1. Net worth rupees five hundred crore or more (Rs. 500,00,00,000/-) or rupees five arab
  2. Turnover rupees one thousand crore or more (Rs. 10,00,00,00,000/-) or rupees ten arab
  3. Net Profit rupees five crore of more (Rs. 5,00,00,000/-)

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Defining CSR in India

I discussed Corporate Social Responsibility here, when there was a pending Bill. Now, we have a full fledged corporate social responsibility law in place. Section 135 of the companies Act, 2013, redrafted Schedule VII and the Companies (Corporate Social Responsibility Policy) Rules 2014 will be effective from 1st April 2014. I agree with V. Umakanth  in India CorpLaw say, April 1 this year would mark a new era in corporate law and governance in India with companies being required to comply with the quasi-mandatory obligations regarding CSR, an approach that is fairly unique in the global context.

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Quotes from Companies Bill debate in Rajya Sabha

UPDATE: on 30th August 2013: Companies Bill 2012 became the Companies Act, 2013 (Act 18 of 2013).

For every new law, legislative intent, which show it in debates taken place in Parliament, become important. These debates offer a guide while drafting subordinate legislation. There are many questions about future rules and regulations. I, here, compiled some important quotes from this debates from Rajya Sabha.[i][ii][iii]

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Every mainstream Indian have at least one document who can serve proof of his identity and address. It may be your ration card, voter identity card, driving license or high-profile passport. These documents are your key to gain entry to any place, get reservation in train, open bank accounts, secure phone connection, and even to claim compensation in case of misfortune like accident or death.

We may have multiple identities, true and false identities as government always claim about false ration cards.

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Corporate Social Responsibility under Companies Act 2013

UPDATE: on 30th August 2013: Companies Bill 2012 became the Companies Act, 2013 (Act 18 of 2013).

The provision related to Corporate Social Responsibility under present Clause  Section 135 of Companies Bill 2012 Act 2013 applies to all companies; listed, unlisted, public, private, one – person subject to limitation based on its net worth, turnover and net profit. These threshold limits are:

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UPDATE: on 30th August 2013: Companies Bill 2012 became the Companies Act, 2013 (Act 18 of 2013).

Delegation of Power is buzz word in this Companies Bill 2012. This delegation is not only from legislature to Executive but also from Board of Directors to its committees. Committees are not new to Indian Corporate Jurisprudence. Audit Committee was introduced in the present Companies Act, 1956 twelve years ago in year 2000. Schedule XII also has Remuneration committee.

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International Workers Day is just another holiday for socialist and bad memories for capitalists; no care for labours – labour of unorganised sector which constitute majority of Indian Labour.

Unorganised labour and stray dogs are comparable – they should job (bark) when work – pressure come (thief) come and get some stale food thrown to them. They have no owner, brand, organisation, identity, address, region, religion, caste, or life. They are not stakeholders for corporate governance events and not responsibility for responsible business

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Employee’s welfare is also a matter corporate social responsibility for all body corporate. During debate on corporate social responsibilities we heard a lot from all quarters.

Principle 3 of National Voluntary Guideline on Social, Environment, & Economic Responsibilities of Business issued by Ministry of Corporate Affairs say, ”Businesses should promote the well being of all Employees.” On page 17 of this guideline, it is mentioned that “…strongly believe that addressing health issues significantly contributes to the sustainability of their business operations and especially the health and welfare of their employees.” There is separate guideline issued by Government for Central Public sector Enterprises.

As a stakeholder, we have interest in measures taken by professional bodies under Ministry of Corporate Affairs. It is noteworthy to note, these professional bodies are very instrumental to spread awareness about corporate social responsibilities on behalf of government. I filed applications under three professional bodies and asked same questions:

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There is a clear conflict of interest among promoters, shareholders and other stakeholders of company. The conflict of public shareholders and stakeholders put them in very interesting position.

In the recent cases on 2G scam in India, the government often quoted the cost-effective services to end-user of these service and product as one reason of allocation of resources at such cheap prices. Ministers claim that at CAG suggested prices of the spectrum, call rates would be higher than present rates and become unaffordable to most of the users. Sometimes, it is also suggested that present information revolution may not be happened in India if spectrum allocation were happened according to CAG suggestions.

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