1 JANUARY 2021

Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021

BY NANDINI NARAYANASWAMY

The Ministry of Corporate Affairs (MCA) has notified the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 (the “CSR Rules”) with effect from January 22, 2021..


In Brief - How do these rules impact non-profits?




  • Section 8 companies, trusts and societies seeking CSR funding to register on the MCA portal with effect from April 1, 2021 by filing form CSR 1.This may be done through practising company secretary/chartered accountant/ cost accountant.
  • Registration of Trust/Society/ Sec.8 company is also a pre-condition for applying CSR funds towards capital assets. NGO’s having done so in the past also must register under MCA.
  • Companies can collaborate with organisations mentioned in item (ix) of Schedule VII of the Companies Act, 2013 to undertake research and development activity of new vaccine, drugs and medical devices related to COVID-19 for the financial years 2020-21, 2021-22, 2022-23.
  • Organizations involved in training of Indian sports personnel representing any State or Union territory at national level or India at international level can seek CSR funds.
  • Registered Sec 8 companies, trusts and societies under Section 12A and 80G of the IT Act, having an established track record of 3 years in undertaking similar activities will continue to qualify for CSR funding. This is a relief because under the draft CSR rules proposed in March 2020, only Section 8 companies were so eligible.
  • As the CSR Rules mandate companies to plough back any surplus funds arising out the CSR projects into the same project, this is an opportunity for NPOs to seek funds to complete any incomplete projects.
  • In a first, the new CSR Rules now allows CSR to be applied towards creation/acquisition of capital assets for self-help groups/ collectives.
  • Impact assessment now mandated in case of high value projects.


In detail, here is how the Amendment to the CSR Rules will impact non-profits receiving CSR funding:


1. CSR activity to include research and development for COVID-19


Companies undertaking research and development activity of new vaccine, drugs and medical devices in their normal course of business can continue to undertake such related to COVID-19 for financial years 2020-21, 2021-22, 2022-23; provided (a) such research and development activities are carried out in collaboration with any of the institutes or organisations mentioned in item (ix) of Schedule VII to the Companies Act, 2013 (the “Act”)[1]; (b) details of such activity is disclosed separately in the annual report on CSR included in the Board’s Report.


2. CSR activity to include training of Indian sports outside India


Training of Indian sports personnel representing any State or Union territory at national level or India at international level will now come under CSR activity.


3. CSR Implementation allowed through Trusts /Societies



CSR obligations can be fulfilled by a Company through:

a. a Section 8 company or a registered public trust or a registered society, registered under section 12A and 80G of the Income Tax Act, 1961 established by the company, either singly or along with any other company, or

b. a Section 8 company or a registered trust or a registered society, established by the Central Government or State Government; or

c. any entity established under an Act of Parliament or a State legislature; or

d. a Section 8 company or a registered public trust or a registered society, registered under section 12A and 80G of the Income Tax Act, 1961, and having an established track record of at least 3 years in undertaking similar activities.


4. Register with Central Government by April 1, 2021


Section 8 companies, trusts and societies seeking CSR funds must now register itself with the Central Government by filing Form CSR-1 electronically with the Registrar of Companies with effect from April 1, 2021.

Form CSR-1 has to signed and submitted electronically by the entity and has to be verified digitally by a Chartered Accountant in practice or a Company Secretary in practice or a Cost Accountant in practice. On the submission of the Form CSR-1 on the portal, a unique CSR Registration Number shall be generated by the system automatically. However, this will not affect CSR projects or programmes approved prior to April 1, 2021.


5. Surplus to be transferred to “Unspent CSR Account”


Any surplus arising out of the CSR projects shall be ploughed back into the same project or shall be transferred to the “Unspent CSR Account” and to be spent as per CSR policy and action plan of the company or transfer such surplus amount to a fund specified in Schedule VII, within a period of 6 months of the expiry of the financial year.


6. CSR for creation of capital assets


The CSR amount may be spent by a company for creation or acquisition of assets which shall only be held by a




  • Section 8, a registered public trust or registered society;
  • beneficiaries of the said CSR project, in the form of self-help groups, collectives, entities; or
  • a public authority

Capital assets created by a company prior to the commencement of the CSR Rules, shall within a period of 180 days from the date of commencement comply with the requirements of this rule, which may be extended to a further period of 90 days with the approval of the board of the Company based on reasonable justification.


7. Impact Assessment


Companies can undertake impact assessment, through an independent agency of their CSR projects having outlays of 1 crore rupees or more, and which have been completed not less than 1 year before undertaking the impact study.


Thus with all non-profit data being reportable centrally, the path is being paved for a highly transparent and accountable social sector. Grant funds can now be tracked from point of origin to point of application and scale of impact. These are but, the stepping stones for the roll out of the social stock exchange.


[1] Contribution to incubators funded by Central Government or State Government or any agency or Public Sector Undertaking of Central Government or State Government, and contributions to public funded Universities, Indian Institute of Technology (IITs), National Laboratories and Autonomous Bodies (established under the auspices of Indian Council of Agricultural Research (ICAR), Indian Council of Medical Research (ICMR), Council of Scientific and Industrial Research (CSIR), Department of Atomic Energy (DAE), Defence Research and Development Organisation (DRDO), Department of Science and Technology (DST), Ministry of Electronics and Information Technology) engaged in conducting research in science, technology, engineering and medicine aimed at promoting Sustainable Development Goals (SDGs)

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