Form CSR 2 Applicability and CSR Compliance – latest 2024

In the corporate sphere, CSR enables companies to create a positive impact that goes beyond profit generation. The MCA recently revised Rule 12(1B) of the Companies (Accounts) Rules, 2014, setting the deadline for filing Form CSR 2 for the fiscal year 2022-23. Understanding the significance of this amendment is essential to grasp CSR’s role in shaping the business landscape.

Form CSR 2 Applicability and CSR Compliance – latest 2024

Table of Contents

Why CSR is mandatory?

CSR is mandatory as per section 135 of the Companies Act, 2013. Any company falling under this section must comply with CSR provisions in India. The requirement of CSR is to allocate a minimum of 2% of their net profit from the previous three years for CSR initiatives.

CSR Applicability

The Corporate Social Responsibility (CSR) provisions apply to companies that fulfil at least any of the following conditions in the previous financial year:

  • Net worth exceeding Rs. 500 Crore.
  • Turnover exceeding Rs. 1000 Crore.
  • Net profit exceeding Rs. 5 Crore.

The Board of Directors of the above companies must ensure that they spend 2% of their average net profit over the last 3 years on CSR activities. If a company has been in operation for less than 3 years, it should spend 2% of its average net profit over the preceding years on CSR activities.

CSR Requirements

Since the financial year 2020-21, every company falling under Section 135(1) must comply with the new rule of filing the Annual CSR Report using Form CSR 2. This rule specifically applies to companies meeting the criteria stated in the Companies Act, 2013.

The Companies (Corporate Social Responsibility Policy) Amendment Rules, 2022, or CSR Rules, introduced several changes:

  • Inserting a second proviso in Rule No. 3, making it mandatory for companies to establish a CSR Committee and comply with Section 135(2) to (6), ensuring compliance of CSR initiatives regarding unspent amounts.
  • Omitting sub-rule 2, clarifying that companies must check thresholds on a yearly basis and comply with Section 135 provisions applicable during the immediately preceding financial year.
  • In Rule No. 4(a), expanding the entities’ scope that can assist companies in fulfilling their CSR obligations.
  • Amending Rule No. 8(c) to reduce the percentage (%) of expenses allowed for Corporate Social Responsibility from 5% to 2% or 50 Lakhs of the total CSR expenditure for the financial year. The overall criteria are made beneficial by considering “whichever is higher” instead of “whichever is less,” allowing companies to book a minimum of 50 Lakhs even if the 2% criterion is lesser.
  • Modifying Annexure II, depicting the format of form CSR 2, to align with recent amendments made through Companies (CSR Policy) Amendment Rules, 2021, dated 22nd January 2021, The Companies (Amendment) Act, 2020, dated 22nd January 2021, and the Companies (Accounts) Amendment Rules, 2022, dated 11th February 2022. It mirrors the web-based Form CSR-2


For the fiscal year 2022-23, there are updates to the filing process in Form CSR 2 by the Ministry of Corporate Affairs (MCA). Now, companies must submit a separate return detailing their CSR expenditure in Form CSR 2. This submission should be made to the Registrar of Companies (ROC) on or before March 31, 2024. Importantly, prior to filing Form CSR 2, companies need to ensure completion of the filing for Forms AOC-4/AOC-4 (NBFC Ind AS)/AOC-4 (XBRL), as applicable.

Read also: How To Become an Independent Director Under Companies Act, 2013

Use and Transfer of Unspent Amount

If the above company has unspent CSR funds, they have options to allocate them wisely. Here is a list  of those options:

  • Prime Minister’s National Relief Fund: The Company can contribute to this fund.
  • Central Government-initiated Funds: The Company can contributie in any fund initiated by CG concerning any socio-economic development, relief, or welfare funds for scheduled castes, minorities, tribes, women, and other backward classes.
  • Incubator Contributions: The Company can contribute to support an incubator funded by the central or state government, public sector undertaking, or any other relevant agency.
  • Educational and Research Institutions: The Company can contribute to public-funded universities, IITs, and various research bodies working towards Sustainable Development Goals (SDGs).

In case of unspent amounts from ongoing CSR projects, create a dedicated account, the ‘Unspent Corporate Social Responsibility Account,’ within 30 days from the financial year-end. Utilize these funds for CSR obligations within 3 years. If unused, the Company must transfer them to the specified funds within 30 days after the 3rd financial year.

CSR Policy

CSR Policy states the specific activities the company plans to undertake, aligning with Schedule VII to the Act. Importantly, these activities should not duplicate what the company already does in its regular operations. Here is the key points regarding CSR Policy:

  • The Board ensures transparency by posting the CSR Policy contents on your company’s website.
  • Commitment is more than words – your company actively engages in the CSR activities outlined in the policy.
  • It join forces with other companies for impactful projects. You can even report separately on joint initiatives.
  • CSR policy is not just a document it is a guide that regularly monitor and assess the progress of your CSR projects or programs.

What is form CSR 2?

On February 11, 2022, the Ministry of Corporate Affairs (MCA) introduced Form CSR 2 as a part of its good corporate governance practices. This form requires corporations to report their CSR (Corporate Social Responsibility) expenses to the Ministry. Companies that fall under Section 135 of the Companies Act, 2013 must contribute a specified percentage of their profits towards CSR activities. Form CSR 2 (report on Corporate Social Responsibility) is mandatory for entities covered by Section 135 of the Act.

How To File CSR-2 Form Online

To meet the updated regulations, companies must stick to the new timeline and accurately fill out the required forms. When completing the web-based Form CSR 2 on the MCA V2 portal, consider the following:

  1. Ensure the filing of Forms AOC-4/AOC-4 (NBFC Ind AS)/AOC-4 (XBRL) is completed, meeting the applicable requirements.
  2. Report on the company’s CSR committee constitution, meetings, and disclose relevant details.
  3. Provide information on capital assets created or acquired through CSR expenditure.
  4. Include details about the CSR policy and approved projects on the company’s website.
  5. Specify CSR project investments and report any unspent CSR funds.
  6. Share insights on the impact assessment of CSR projects, adhering to the Companies (CSR Policy) Rules, 2014.
  7. Confirm whether impact assessments of CSR projects are in line with Companies (CSR Policy) Rules, 2014.
  8. Submit Form CSR 2 separately to ROC before the specified deadline, which is March 31, 2024, for FY 2022-23.

Fines and Penalty

If a company fails to adhere to CSR spending, transferring, or utilizing unspent amounts, it could face a penalty. The penalty amount is Rs.1 crore or twice the required transfer amount to the CSR fund specified in Schedule VII of the Act, or the Unspent Corporate Social Responsibility Account, whichever is lower.

Additionally, officers of such a non-compliant company may be personally liable for a penalty of Rs.2 lakh or one-tenth of the required transfer amount to the CSR fund specified in Schedule VII or the Unspent Corporate Social Responsibility Account, again, whichever is lower.


Corporate Social Responsibility (CSR) isn’t just a passing trend; it signifies a fundamental shift in how businesses view their role in society. Embracing CSR goes beyond fulfilling legal obligations; it’s a recognition of the interconnectedness between businesses, communities, and the environment. As consumers and investors increasingly prioritize ethical and socially responsible practices, companies that make CSR a priority not only contribute to positive change but also secure their position in a mindful and sustainable future.

Frequently Asked Questions (FAQ)

A CSR fund is a collection of money that businesses set aside to support socially responsible initiatives. These initiatives, known as Corporate Social Responsibility (CSR), aim to improve the environment, society, and the communities in which a company operates. The fund demonstrates a company’s dedication to ethical business practices and its impact on society.

CSR stands for Corporate Social Responsibility.

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