India is one of the few countries where corporate social responsibility (CSR) spending is required by law for companies above certain thresholds. Since the Companies Act, 2013 introduced mandatory CSR, companies have funded education, health, water, livelihoods and environmental projects across the country, including many in Rajasthan. For companies, CSR is a compliance obligation, but done well it also builds community trust and employee pride. This guide explains the key rules and how to plan meaningful projects.
Which companies must spend on CSR
Section 135 of the Companies Act, 2013 applies to a company that, in the immediately preceding financial year, had:
- a net worth of ₹500 crore or more, or
- a turnover of ₹1,000 crore or more, or
- a net profit of ₹5 crore or more.
Such companies must spend at least 2% of their average net profits of the three immediately preceding financial years on CSR activities, in line with their CSR policy.
What counts as CSR
Eligible activities are listed in Schedule VII of the Act. They include eradicating hunger and poverty, promoting education and healthcare, sanitation and safe drinking water, gender equality and women’s empowerment, environmental sustainability, protection of heritage and culture, rural development, sports, disaster management and contributions to specified funds. Activities in the normal course of business, benefits only for employees and political contributions do not count.
Governance: committee and policy
Companies covered by CSR must have a board-approved CSR policy and, unless the CSR obligation is within the limit specified for exemption, a CSR committee of the board. The board approves an annual action plan, monitors implementation and discloses CSR activities in the board’s report and on the company website.
Implementing projects
Companies can implement projects directly or through eligible implementing agencies such as registered trusts, societies and Section 8 companies. Implementing agencies must be registered with the Ministry of Corporate Affairs for CSR. Due diligence on the agency’s track record, financial health and governance is essential, along with clear agreements, milestones and reporting.
Unspent amounts and impact assessment
If the required amount is not spent, the rules require unspent amounts relating to ongoing projects to be moved to a dedicated unspent CSR account within the prescribed time and spent within the allowed period; other unspent amounts must be transferred to a fund specified in Schedule VII. Larger companies must also carry out impact assessments for larger projects as prescribed. Planning projects realistically avoids these complications.
Designing CSR that creates real impact
- Start with a needs assessment in the communities near your operations.
- Focus on a few themes where you can make a lasting difference.
- Work with local panchayats, schools and health centres.
- Set measurable outcomes, not just spending targets.
- Plan for sustainability after the project ends.
In rural Rajasthan, water conservation, girls’ education, skill development and women’s livelihoods are areas where well-designed projects can transform lives. ATTPL co-founder Maya Godara has written about women’s livelihoods through self-help groups, and panchayat-level planning is explained in ATTPL EMS’s Gram Panchayat Development Plan guide.
Reporting and transparency
Companies report CSR details in their annual filings with the Ministry of Corporate Affairs. Good practice goes further: publish project stories, photographs and outcome data, and share learnings honestly. Transparent reporting builds credibility with communities, employees and investors.
How ATTPL can support
ATTPL Consultancy supports companies with compliance management, and ATTPL Legal advises on corporate legal matters. Infrastructure for community projects, such as water and school buildings, can be delivered with ATTPL Infra. See our guide on vendor due diligence, or contact ATTPL (ऐट्प्ल) HOLDCO – GROUP.
Frequently asked questions
Which companies must spend on CSR in India?
Companies with net worth of ₹500 crore or more, turnover of ₹1,000 crore or more, or net profit of ₹5 crore or more in the preceding financial year.
How much must a company spend on CSR?
At least 2% of its average net profits of the three immediately preceding financial years, as per Section 135.
Can CSR funds be spent through an NGO?
Yes, through eligible implementing agencies such as registered trusts, societies and Section 8 companies that are registered with the Ministry of Corporate Affairs for CSR.
This article is general information. CSR rules are amended from time to time; consult your company secretary or legal adviser for your company's obligations.
