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CS Divesh Goyal
CS Divesh Goyalhttp://csdiveshgoyal.in
CS Divesh Goyal is a Fellow member of ICSI, Practicing Company Secretary, and Steering Voice in the Corporate World. He is a Prop. at Goyal Divesh & Associates, Company Secretaries. He is a competent professional having enrich 6 years post qualification experience as Company Secretary with expertise in Corporate Law, FEMA, IBC, SEBI, RBI. He has written more than 600 editorials on Companies Act, 2013 to keep at pace with the latest changes and critically analyse the implications of various provisions of the Companies Act, 2013, Insolvency & Bankruptcy Code, 2016, FEMA, RBI, SEBI etc. He is a vibrant, sought after, and spellbinding speaker and has delivered more than 200 sessions on various aspects of Company Law at ICSI, ICAI, and online platforms. Apart from his passion for his work he also believes in elevating his profession and for that dream

MCA has introduced “Companies (Corporate Social Responsibility Policy), Amendment Rules, 2021.

Most Important: CSR Spending made mandatory from voluntary w.e.f. the financial year 2020-21.

Date of Effectiveness of these rules:

These rules came into effect on 22 January 2021, as the same has been published in the official gazette on the same date. Therefore, these amended rules are applicable on the financial year 2020-21 (subject to the specific date of some rules).

Some FAQ’s 

S. No Question Solution
1.       What is the time limit to transfer the unspent CSR amount for FY 2020-21? The amount remaining unspent for the FY 2020-21 shall be transferred to Schedule VII fund latest by September 30, 2021.
2.       What fund in Schedule VII are they referring to for transfer unspent CSR amount?
  • Clean Ganga Fund set-up by the Central Government for the rejuvenation of the river Ganga
  • prime minister’s national relief fund
  •  Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund)
3.       A company was falling under Section 135(1) in the year 19-20 (as per financials of the year ended 31-03-2019). However, as per financials of 31-03-2020, It is not crossing any threshold. Is it required to spend any amount during 2020-2021? To check the applicability of the provision of Section 135, Company has to check the criteria of Immediately Preceding Financial Year.

As of 31.03.2020 company doesn’t meet the criteria, therefore no need to spent any amount in 2020-21.

4.       What should be the course of action for the total CSR unspent amount before this notification?
  •  If such an unspent amount is relating to the financial year 2018-19 or any earlier years, then no action required for such unspent amount.
  • If an unspent amount relating to FY 2019-20 (i.e. FY. ended 31.03.2020) then such amount requires to spent till 31.03.2021, otherwise has to transfer to funds mentioned in Schedule VII.
5.       Can we transfer the excess fund to any of our ongoing CSR funds? If any ongoing project is going on and the amount required to spend on that ongoing project. A company can transfer such an amount in a separate account as per guidelines.
6.       What is the meaning of the word Surplus under Rule 7(2) If Company spent on any CSR project and earn money from that project. That earned money shall be considered as surplus.
7.       What is the due date of filing CSR-1? If any trust, Sec 8 company, etc want to take donation under CSR Activity w.e.f. 01.04.2021. They first have to file CSR-1.
8.       Whether impact assessment report is required for FY 20-21
9.       Suppose a company’s net profit is more than 5 crores for FY ending 19-20, then how much time period a company has to spend on CSR? The company has to spent CSR in FY. 2020-21 for the given question.

If the profit of 2020-21 came less than 5 crores then no need to comply with provisions in 2021-22.

10.    If, CSR once applicable always applicable to a company? Is this statement, right? This is an incorrect statement. There is no such condition in CSR for always applicability.
11.    Suppose a company has not spent the CSR amount in 2020-21, can it spend in FY 2021-22? If Company did not spend on CSR in 2020-21. In such case company has to transfer such an unspent amount in Schedule VII funds on or before 30th September 2021.
12.    CSR became applicable to a Company from this FY i.e. FY 2020-21 and the 2% of average profit is negative, so can we consider not constituting CSR Committee as per Sec 27 of amendment act 2020. If 2% amount is negative after calculation. In such a case, the company doesn’t require to spend on CSR activity.

However, as per 135(9) company is not even required to constitute CSR Committee.

13.    Can you set off an excess amount of FY 19-20 in FY 20-21? These provisions are not effective from a retrospective date. Therefore, one can opine that excess spent in 2020-21 can be set off in next year.

But excess spent of 2019-20 can’t set off.

14.    Already constituted committee needs to be dissolved where spend is not required above 50L?
15.    In E-form CSR 1: the entity has to enter either CIN or Registration number but How will MCA prefill the information via Registration number of Trust? If we look at the columns in the form. We can opine that in case of an entity other than Company CSR-1 shall allow mentioning the information manually.
16.   Can the 5% limit for administrative expense will apply to the only entities making CSR or to the CSR trust created for the CSR activities of the Group too? 5% Limit of administrative expenses will apply only to Companies on whom CSR provisions shall be applicable.
17.    If the company itself carry on CSR Activity whether it has to be registered by filing CSR 1 As per Rule 4, even a company itself undertaking CSR Activity is required to register by filing CSR-1
18.    Whether current CSR policy needs to amend as per the changes in rules. It is advisable for Companies to amend current CSR policies as per new rules.
19.    If implementing agency is in form of Public Trust and has individuals as its Trustees. Can we do CSR expenditure under this trust structure? Such Public trust must be registered public Trust U/S 12A and 80G to satisfy the criteria of implementing agency.
20.    Does the Trust have to transfer the unspent amount to the Unspent CSR Account/Fund? Trust doesn’t require to transfer the unspent amount to Funds mentioned in Schedule VII.
21.    Once a Company allocates a certain amount to a specific project, can we pull out that amount? A company by passing a resolution in Committee or if required by amending CSR Policy can do the same.
22.   If the Financial year of the Company ends on 31.12.2020 then Annexure I shall be used Annexure-II. If the financial year started on or after 01.04.2020 then required to attach Annexure-II. Otherwise required to attach Annexure I.

In this question financial year start on 01.01.2020 therefore Annexure I shall be attached.

Disclaimer: The entire contents of this document have been prepared based on relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness, and reliability of the information provided, I assume no responsibility, therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not professional advice and is subject to change without notice. I assume no responsibility for the consequences of the use of such information.


[1] http://www.mca.gov.in/MinistryV2/extensionofagm.html

[1] http://egazette.nic.in/WriteReadData/2021/224640.pdf

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