Which activities count as CSR?
An activity counts as CSR when it is listed in Schedule VII, it is carried out in India, and it is not the company’s ordinary business. The company that must spend is described on the CSR applicability page.
What does Schedule VII cover?
Schedule VII includes eradicating hunger, poverty, and malnutrition, promoting health care and sanitation, promoting education and vocational skills, promoting gender equality, ensuring environmental sustainability, protecting national heritage, art, and culture, supporting training for rural, nationally recognised, Paralympic, and Olympic sports, contributing to research and to incubators, and rural development. It also includes contributions to the funds the Schedule names, such as the Prime Minister’s National Relief Fund. The company’s CSR policy lists the projects it will undertake from that Schedule, how they will be carried out, and how they will be monitored.
What does not count?
Spending in the normal course of business does not count. A contribution to a political party does not count. An activity that benefits only the company’s employees, as the rules define employees, does not count. A sponsorship that is a marketing benefit for the company’s own products does not count. Work outside India does not count, other than training Indian sports personnel who represent India or a State or Union territory at national or international level.
Who may carry the activity out?
The company may carry the activity out itself. It may also use an implementing agency the rules allow: a section 8 company, a registered public trust, or a registered society, established by the company or by the Central or a State Government, or another such body with a track record of at least three years in similar work. The agency files Form CSR-1 and meets the registration conditions the rules set before it receives the funds. A section 8 company is one of those routes. It is not, by itself, a CSR policy.
What happens to a surplus?
A surplus arising from a CSR activity does not form part of the company’s business profit. It is ploughed back into the same project, or transferred as the rules require. Money that is budgeted and then left unspent follows the transfer rules on the unspent CSR page.
Frequently asked questions
Four questions cover ordinary business, political contributions, work outside India, and a surplus.
Is the company’s ordinary business CSR?
No. An activity undertaken in the normal course of business does not count as CSR spending.
Does a contribution to a political party count?
No. A contribution to a political party is outside CSR.
Does work outside India count?
CSR activities are undertaken in India. Training of Indian sports personnel representing India, or a State or Union territory, at national or international level is the exception the rules allow.
Can the company keep a surplus from a CSR project?
No. A surplus does not form part of the business profit. It is used again for CSR or transferred as the rules require.
Sources
The list of activities is Schedule VII. What is excluded, and who may implement a project, is in the Companies (CSR Policy) Rules, 2014.