Year end complainces for CSR – CFOs need to be CSR-Ready for 31.03.2025
As we approach year-end closing, CFOs must double-check CSR compliances to ensure smooth regulatory filings and responsible corporate governance:
1. CSR Applicability Check
Did your company during the imediately preceding PY meet the ₹500 Cr Net Worth/ ₹1000 Cr Turnover/ ₹5 Cr Net Profit threshold? If yes, CSR compliance is mandatory.
Caution: Compute Net Profits as per Section 198 and Rule 2(1)(h)
2. 2% CSR Spending Compliance
Ensure that at least 2% of the average net profits of the last 3 years is spent on eligible CSR projects as per Schedule VII of the Companies Act.
Excess amount spent may be set off against the requirement to spend up to immediate succeeding three FYs
Caution: Compute Net Profits as per Section 198 and Rule 2(1)(h)
3. Unspent CSR Funds: Transfer Rules
Ongoing Projects → Transfer unspent CSR amount to a CSR Unspent Account within 30 days.
Non-Ongoing Projects → Transfer unspent CSR to a government fund (PM CARES, etc.) within 6 months.
4. Impact Assessment Report (Mandatory for Large CSR Spends)
If your past 3 years’ average CSR obligation is ₹10 Cr+, an Impact Assessment Report is mandatory for projects with outlays of ₹1 Cr+. Ensure the cost of impact assessment does not exceed 2% of CSR spend or ₹50 lakh, whichever is higher.
5. CSR Policy Review & Board Approval
The Board must review & approve the CSR policy. Ensure the policy is published on the company’s website.
6. CSR Disclosure in Board’s Report & Financial Statements
CSR spending, unspent funds, reasons for non-utilization, and impact assessment findings must be disclosed in the Annual Report.
The Board of a company shall satisfy itself that the funds so disbursed have been utilised for the purposes and in the manner as approved by it and the Chief Financial Officer or the person responsible for financial management shall certify to the effect.
7. CSR Committee Meetings & Annual Action Plan
CSR Committee must meet, approve the Annual CSR Action Plan, and ensure proper documentation of decisions.
8. Taxation & Accounting Compliance
CSR expenses are NOT deductible under Income Tax Act (Section 37(1)). Ensure correct provisioning & accounting under Ind AS/AS.
9. CSR-2 & AOC-4 Filing with MCA
CSR-2 (Annual CSR Compliance Report) must be filed with MCA along with AOC-4 before the due date.
10. Third-Party CSR Implementation & Compliance
If CSR activities are executed through NGOs or third parties, ensure:
They are registered with MCA (Form CSR-1 approved).
They comply with Section 80G of the Income Tax Act.
Their fund utilization is properly tracked & reported.
