Corporate Social Responsibility in India: CSR Rules and Company Examples

What Are the Permitted CSR Activities Under Schedule VII?

Schedule VII lists the causes that qualify. A project outside this list won’t count toward the 2%, however useful it is to the community.

Education and Skills Development

Schedule VII deals with education, which includes special education, as well as the development of vocational skills for employment. Examples include school construction, science labs, scholarships, computer laboratories, training of teachers and tradesmen such as welders, electricians and retailers.

The manufacturer of parts for cars in Pune providing an electrician training course at a nearby ITI would be one example.

Health Care, Sanitation and Elimination of Hunger

This is the first item in the Schedule and the one which is chosen most often by organizations. This deals with preventive and therapeutic health services, food, sanitation and drinking water.

Examples are mobile hospitals, cancer detection camps, kitchen in schools, community toilet facilities and reverse osmosis plant for water in villages.

Gender Equality and Women’s Empowerment

The Schedule covers gender equality, women’s hostels, homes for orphans, old age homes and day care centres. It also covers steps to reduce inequalities faced by socially and economically backward groups.

Self-help group training, women’s hostels near industrial areas and livelihood programmes for rural women all qualify.

Environmental Sustainability

This list consists of ecological balance, flora and fauna, animal rights, agroforestry, natural resource conservation, and quality of soil, air, and water. Any contributions towards Clean Ganga Fund would also be considered for inclusion. Tree plantation is an extremely popular endeavor.

Rural Development and Slum Area Development

Rural development projects cover village infrastructure, watershed work, farm support and local livelihoods. Slum area development covers housing upgrades, drainage and sanitation in notified slum areas.

These projects are long and often depend on local government approvals. 

Other Eligible CSR Activities Under Schedule VII

Here are the other eligible activities:.

• Protection of national heritage, art and culture
• Measures for armed forces veterans, war widows and their dependants
• Training in rural sports, nationally recognised sports and Paralympic and Olympic sports
• Contributions to the Prime Minister’s National Relief Fund and similar government funds
• Contributions to government-funded incubators and research in science, technology, engineering and medicine
• Disaster management, including relief and rehabilitation
• Up to 10% of the yearly obligation through Zero Coupon Zero Principal instruments under Rule 4A

Which Activities Do Not Qualify as CSR Under Indian Law?

As mentioned above about the qualified activities. There are some activities which do not qualify. Even if there is good intention.The law rules out several activities, even when they help people.

Activity	Why it doesn’t count
Work done in the normal course of business	It serves the company, not the community
Projects outside India	Only training of Indian sports personnel is allowed abroad
Contributions to political parties	Barred under Section 182
Schemes benefiting employees and their families	The benefit isn’t public
Sponsorships meant to market products or services	The purpose is promotion
Activities required by another law	They’re already a statutory duty

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How Can Companies Implement CSR Activities in India?

Now that we know how important Corporate Social Responsibility is. Let’s learn how a company can implement these Corporate Social Responsibility activities.

Five-step CSR implementation process in India

Step 1: Identification of Community Need and Selection of CSR Activities

Begin from where the organization works. Meet panchayats, school authorities, health workers and local administration. Refer to the statistics provided by the district regarding literacy, anaemia, water availability and dropout ratio, and select the area which needs the most attention. The most important thing for an industry in a district facing water shortage is the issue of water itself.

Step 2: Develop a CSR Policy and Annual Action Plan

The CSR committee writes the policy, which is approved by the board and published on the company’s website. This policy outlines the areas of interest and the methodology to be used for monitoring the projects.

Annual Action Plan is an independent document that includes projects and budgets, organizations executing the projects, schedule and whether the project is ongoing or not. Board approves the action plan annually.

Step 3: Allocate the CSR Budget

Calculate the 2% figure first. Then split it across projects, keeping administrative costs under 5% and setting aside money for monitoring. Impact assessment costs can be counted too, up to 5% of the year’s CSR spending or ₹50 lakh, whichever is higher.

Multi-year projects need a budget for every year, not just the first.

Step 4: Choose an Implementation Method

Companies have four routes.

Route	What it means
Direct	The company’s own team runs the project
Own foundation	A Section 8 company, trust or society set up by the company
External agency	A registered NGO or trust with a CSR-1 registration number and a three-year track record
Collaboration	Two or more companies pool funds on one project

Small companies rarely have a CSR team. They usually go through an NGO, which makes agency selection the most important decision they’ll make.

Step 5: Monitor Projects and Measure CSR Impact

Collect utilisation certificates, visit project sites and track results against targets set at the start. A health camp that treated 5,000 people sounds good. A fall in untreated hypertension in the same villages tells you more.

Larger companies must also commission independent impact assessments, covered in the compliance section below.

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What Are the CSR Registration, Reporting and Compliance Requirements?

CSR compliance has two forms, CSR-1 and CSR-2 are here are they:

Form CSR-1: Registration of Implementing Agencies

Form CSR-1 is filed on the MCA portal by the implementing agency, not by the company. The agency gets a unique CSR registration number after a practising professional certifies the form.

Before releasing any money, check that the agency’s number is valid. 

Form CSR-2: Annual CSR Reporting

Companies file Form CSR-2 as an addendum to Form AOC-4 along with their annual financial statements. It reports the CSR obligation, the projects, the agencies, the amount spent and the amount left unspent.

This is separate from the Board’s report. The two documents should match, and mismatches are the commonest filing error.

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CSR Disclosure and Documentation Requirements

The Board’s report carries an annexure with the CSR policy summary, the committee’s composition, the average net profit, the prescribed obligation, the amount spent and details of any unspent amount with reasons.

The company website must show the committee’s composition, the CSR policy and the projects approved by the Board.

The Chief Financial Officer, or the person handling finances, certifies that funds were used as the Board approved. Companies with an average CSR obligation of ₹10 crore or more over the three preceding years must also run independent impact assessments for projects with an outlay of ₹1 crore or more that finished at least a year ago.

Keep invoices, utilisation certificates, MoUs, site photographs and meeting minutes. Auditors ask for them.

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What Happens If a Company Does Not Spend Its Mandatory CSR Amount?

Not spending isn’t automatically a violation. Not explaining it, or not moving the money correctly, is.

Treatment of Unspent CSR Amounts

The law splits unspent money into two buckets. One is for ongoing projects, which are multi-year projects lasting no more than three years excluding the year they begin. The other is for everything else.

The Board report must explain why the money wasn’t spent. A vague line about “project delays” won’t satisfy a reviewer.

What Is an Unspent CSR Account?

It’s a separate bank account in a scheduled bank, named the Unspent Corporate Social Responsibility Account of the company for that financial year. Money for ongoing projects moves there and can be used only for those projects.

Rules for Transferring Unspent CSR Funds

Here are the rules for transferring the unspend CSR funds:

Situation	Where the money goes	Deadline
Ongoing project, amount unspent	Unspent CSR Account	Within 30 days of the financial year end
Money in that account still unspent	A fund listed in Schedule VII	Within 30 days of the third financial year end
Other unspent amount	A fund listed in Schedule VII	Within 6 months of the financial year end

The Corporate Laws (Amendment) Bill, 2026 proposes to extend the 30-day windows to 90 days. That change isn’t in force yet.

Projects slip for ordinary reasons such as land approvals and monsoon delays. Build realistic timelines before labelling a project as ongoing.

Penalties for CSR Non-Compliance in India

Section 135(7) sets monetary penalties for failing to spend or transfer the money. They’re civil penalties, not jail terms.

Who	Penalty
The company	Twice the unspent amount or ₹1 crore, whichever is less
Each officer in default	One-tenth of the unspent amount or ₹2 lakh, whichever is less

False statements in the Board report can attract separate liability under Section 448 of the Act. The cost of a wrong report can be much higher than the cost of the missed spending.

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What Are Some Notable Corporate Social Responsibility Examples in India?

Scale differs, but the pattern is the same for these companies. Large groups run CSR through foundations and long programmes instead of one-off gifts. Check each company’s latest annual report for current figures, since spending changes every year.

Tata Group

The Tata Trusts hold a majority stake in Tata Sons, so philanthropy sits close to the group’s ownership. Support for cancer care at the Tata Memorial Centre is a long-running example. Tata Steel’s work with tribal communities in Jharkhand and Odisha covers health, education and livelihoods.

Reliance Industries

Reliance Foundation runs programmes in healthcare, education, rural transformation and disaster response. The Sir H. N. Reliance Foundation Hospital in Mumbai and the foundation’s school network are two visible projects.

Infosys

Infosys Foundation, set up in 1996 by Sudha Murty, works in healthcare, rural development, education, libraries and support for destitute people. It also funds the preservation of arts and culture.

Mahindra Group

Nanhi Kali supports the education of underprivileged girls and is one of the group’s best-known programmes. The Mahindra Pride Classrooms train young people for jobs in sectors such as retail and hospitality.

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ITC

ITC’s rural programmes cover watershed development, agriculture support, women’s livelihoods and social forestry. The company has described itself as carbon positive and water positive for many years.

HDFC Bank

HDFC Bank runs its CSR under the Parivartan umbrella. The Holistic Rural Development Programme works in villages on education, skills, livelihoods and financial literacy.

Wipro

Wipro Cares supports education reform, healthcare, disaster relief and ecology. The Azim Premji Foundation is a separate philanthropic organisation, so it shouldn’t be counted as Wipro’s CSR spending.

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What Is the Difference Between CSR and ESG?

CSR is a spending duty under company law. ESG measures how a business performs on environmental, social and governance factors, and investors and lenders use that information to judge risk.

Point	CSR	ESG
Basis	Section 135, Companies Act, 2013	Investor and regulatory expectations
Focus	Spending on community causes	Company-wide performance
Main reader	Government, regulators and communities	Investors and lenders
Reporting	Board report and Form CSR-2	Business Responsibility and Sustainability Report for top listed companies, plus voluntary disclosures
Scope	Eligible companies only	Any company that wants capital

They overlap in the “social” part. A CSR project on women’s livelihoods can feed an ESG report. But a company can spend its full 2% and still score badly on ESG if its factories pollute or its board is weak.

Conclusion

Corporate social responsibility in India now works like a financial compliance function with a social payoff. Missing the calculation or the paperwork will cost you money. 

The hard part in all these is choosing projects that still matter in three years. Start with the threshold test, calculate the 2% from the correct profit figure, pick registered agencies and plan multi-year projects realistically. Watch the Corporate Laws (Amendment) Bill, 2026 as well, because it could change who falls under the rules.

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