For Corporates
CSR in India: What the Law Requires and Why More Companies Are Going Beyond It
India is one of the few countries in the world with a mandatory Corporate Social Responsibility law. Here is what it means, who it applies to, and why forward-thinking companies treat it as opportunity rather than obligation.
Since 2014, Section 135 of the Companies Act has made India one of the few countries in the world with a legally mandated CSR requirement for qualifying companies. Understanding this law matters whether you are a business owner, an employee, or a citizen evaluating how companies near you are contributing to society.
Who must comply?
Any company that meets any one of the following thresholds in the preceding financial year must comply: net worth of ₹500 crore or more, turnover of ₹1,000 crore or more, or net profit of ₹5 crore or more. These companies are required to spend at least 2% of their average net profits from the preceding three financial years on CSR activities.
What qualifies as CSR spending?
Schedule VII of the Companies Act lists eligible activities including eradicating hunger, poverty, and malnutrition; promoting education; promoting gender equality and empowering women; ensuring environmental sustainability; rural development projects; and slum area development. Spending must be through a registered Section 8 company, a registered public trust, or a registered society. Donations to individuals do not count.
The reporting requirement
Companies must constitute a CSR committee at the board level, prepare a CSR policy, and file an annual CSR report as part of their Board's Report. Non-compliance must be explained in writing, and unspent CSR funds must be transferred to a government fund within specified timelines.
Why leading companies go further
Well-run CSR programmes improve brand reputation, employee morale, and community goodwill in areas where companies operate. They reduce social licence risks. And for companies in sectors like manufacturing and mining, genuine community investment often directly reduces conflict and disruption. The law set a floor. Your values set the ceiling.