Corporate Social Responsibility (CSR) in India: Evolving Beyond Compliance

 

A Professional Insight

Introduction

Corporate Social Responsibility (CSR) has become a cornerstone of India's corporate governance framework. With Section 135 of the Companies Act, 2013, India became the first country to mandate CSR spending for eligible companies. Over time, CSR practices have evolved from philanthropic giving to structured, measurable and strategic interventions aligned with national priorities.

Legal Framework

CSR applies to companies meeting any of these criteria:
• Net worth of ₹500 crore or more
• Turnover of ₹1,000 crore or more
• Net profit of ₹5 crore or more

Such companies must spend at least 2% of the average net profits of the previous three years on CSR activities specified under Schedule VII of the Act.

CSR Accounting – Key Principles

Key principles include:
• CSR expenditure must be charged to the Statement of Profit and Loss.
• Unspent amounts for ongoing projects must be transferred to a designated account within 30 days.
• Unspent amounts for other projects must be transferred to a Schedule VII fund within 6 months.
• Excess CSR spending can be carried forward for 3 years.
• CSR done in kind must be valued at cost.
• Surplus arising from CSR cannot be treated as business income.
• Detailed disclosures must be made in the financial statements and Board’s Report.

Why CSR Matters

CSR is no longer just a compliance requirement. It helps businesses strengthen brand value, build community trust, foster employee engagement, support sustainable development, and contribute to India's national priorities including skill development, healthcare, environmental conservation, and digital empowerment.

Conclusion

India's CSR framework has transformed corporate participation in nation-building. With clear regulatory guidance and enhanced accountability, companies can integrate CSR into long-term strategy, ensuring meaningful and measurable impact on society.