CSR-2

Introduction

Corporate Social Responsibility (CSR) refers to the statutory obligation of certain companies to contribute to sustainable development by undertaking specific activities for the welfare of society and the environment.

CSR provisions are governed by Section 135 of the Companies Act, 2013, read with the Companies (Corporate Social Responsibility Policy) Rules, 2014 and any amendments thereof.

CSR-2

Applicability

CSR provisions apply to every company (including a holding or subsidiary of a foreign company), having:

Net worth of ₹500 crore or more, or

Turnover of ₹1,000 crore or more, or

Net profit of ₹5 crore or more

during the immediately preceding financial year.

Key Compliance Requirements

Companies meeting the applicability thresholds are required to:
  • Constitute a CSR Committee of the Board (not applicable for companies spending less than ?50 lakhs).
  • Formulate and adopt a CSR Policy indicating the activities to be undertaken in accordance with Schedule VII of the Act.
  • Spend at least 2% of the average net profits of the last three financial years on CSR activities.
  • Disclose CSR initiatives in the Board’s Report and on the company’s website (if applicable).
  • File requisite forms, such as CSR-2, as prescribed by the Ministry of Corporate Affairs.

Permissible CSR Activities

CSR activities must align with Schedule VII of the Companies Act, and may include areas such as:
  • Eradicating hunger and poverty
  • Promoting education and healthcare
  • Ensuring environmental sustainability
  • Promoting gender equality
  • Contribution to PM CARES Fund, among others.
  • Unspent CSR Amount

If the unspent amount relates to an ongoing project, it must be transferred to a special account within 30 days from the end of the financial year.

If it does not pertain to an ongoing project, the amount must be transferred to a specified fund within 6 months from the end of the financial year.

CSR-2 is a web-based form introduced by the Ministry of Corporate Affairs for reporting detailed disclosures of CSR activities undertaken by companies.

Applicability:

Form CSR-2 is required to be filed by companies covered under Section 135 of the Companies Act, 2013, i.e., those obligated to spend on CSR.

Purpose of CSR-2:

  • To provide structured and uniform information regarding:
  • CSR expenditure for the financial year
  • Activities undertaken as per Schedule VII
  • Details of ongoing projects
  • Unspent CSR amounts (if any)
  • Impact assessment (where applicable)

Filing Requirements:

  • CSR-2 is to be filed annually, in addition to the disclosures in the Board’s Report.
  • It is filed as an add-on form to Form AOC-4.
  • Filing is mandatory even if the company has not spent on CSR during the year.

Note:

Non-compliance with CSR provisions, including failure to file CSR-1 or CSR-2 where applicable, may attract penal consequences under the Companies Act, 2013.