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

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

Date of Effectiveness of these rules:

[1]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 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? Amount remaining unspent for the f.y. 2020-21 shall be transferred to Schedule VII fund latest by September 30, 2021.
2.       What fund in Schedule Vll are they referring for transfer unspent CSR amount? ·       Clean Ganga Fund set-up by the Central Government for rejuvenation of 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 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 applicability of provision of Section 135, Company have to check criteria of Immediately Preceding Financial Year.


As on 31.03.2020 company doesn’t met the criterial, 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.


       i.          If such unspent amount is relating to financial year 2018-19 or any earlier years, then no action required for such unspent amount.

ii.          If unspent amount relating to f.y. 2019-20 (i.e. f.y. ended 31.03.2020) then such amount require to spent till 31.03.2021, other wise have to transfer to funds mentioned in Schedule VII.

5.       Can we transfer the excess fund in any of our ongoing CSR fund?


If any ongoing project is going on and amount required to spent on that ongoing project. Company can transfer such amount in separate account as per guidelines.
6.       What is the meaning of 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 of 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? Company have to spent CSR in f.y. 2020-21 for the given question.


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

10.    If, CSR once applicable always applicable on a company? Is this statement right?


This is 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 not spent on CSR in 2020-21. In such case company have to transfer such 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 case company doesn’t required to spent on CSR activity.

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

13.    Can you set off excess amount of FY 19-20 in FY 20-21.


These provisions are not effective from 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 Eform csr 1: entity have to enter either CIN or Registration number but How will MCA prefill the information via Registration number of Trust?


If we look at the collums in the form. We can opine that in case of entity other then Company CSR-1 shall allow to mention the information manually.
16.    Can 5% limit for administrative expense will apply to only entity making CSR or to the CSR trust created for the CSR activities of Group too ?


5% Limit of administrative expenses will apply only to Companies on whom CSR provisions shall be applicable.
17.    If company itself carry on CSR Activity whether it has to be registered by filing CSR 1


As per Rule 4, even company itself undertaking CSR Activity it is required to register by filing CSR-1
18.    Whether current CSR policy need to amend as per the changes in rules.


It is advisable to Companies to amend current CSR policies as per new rules.
19.    If implementing agency is in form of Public Trust and has individuals as it’s 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 criterial of implementing agency.
20.    Does the Trust have to transfer the unspent amount to the Unspent CSR Account/Fund?


Trust doesn’t required to transfer the unspent amount to Funds mentioned in Schedule VII.
21.    Once a Company allocate certain amount to a specific project, can we pull out that amount?


A company by passing resolution in Committee or if required by amending CSR Policy can do the same.
22.    If Financial year of Company end on 31.12.2020 then Annexure I shall be use of Annexure II. If 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.

Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com).

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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