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CSR Compliance, Section 135 and CSR-1 and CSR-2

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Service: End-to-end CSR compliance under Section 135, from policy and spend to CSR-1 checks and CSR-2 filing.

Fees: CSR compliance starting from INR 24,999 per year (Exl GST and Govt. Charges).

Applies if: Net worth 500 crore, turnover 1000 crore or net profit 5 crore, any one, in the preceding year.

Obligation: Spend at least 2 percent of the three-year average net profit on CSR.

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CSR Compliance: Overview and Quick Summary

📌 TL;DR - CSR Compliance Services at a Glance

Section 135 requires a company that meets any one of the thresholds, net worth 500 crore, turnover 1000 crore or net profit 5 crore in the preceding year, to spend at least 2 percent of its three-year average net profit on CSR. The company adopts a CSR policy, routes funds only through CSR-1 registered agencies, files the CSR-2 annual report, and transfers any unspent amount within the prescribed time.

Parameter	Detail
Governing Provision	Section 135 with the Companies (CSR Policy) Rules, 2014 (amended 2021)
Applicability	Any one of net worth 500 cr, turnover 1000 cr, net profit 5 cr
Spend	At least 2 percent of 3-year average net profit (Section 198)
CSR-1	Registration of the implementing agency with the MCA
Cost	Patron fee from INR 24,999 per year (Exl GST and Govt. Charges)
CSR-2	Annual report on CSR filed with the ROC
Unspent	Ongoing project within 30 days; other within 6 months

CSR services from Patron Accounting cover the applicability and 2 percent computation, the CSR policy and committee, the CSR-1 agency checks, the CSR-2 annual filing, the unspent-amount transfers and the disclosures, plus help to remediate a past shortfall. It is a recurring annual compliance with real penalties. Our team has supported 10,000+ businesses since 2009.

CSR sits within the company’s wider yearly compliance; see our private limited company compliance service for the full cycle, and our secretarial audit service, which reviews the CSR disclosures.

What Is CSR Compliance?

Corporate social responsibility, or CSR, under Section 135 is a mandatory obligation on larger companies to spend a part of their profits on social and environmental activities listed in Schedule VII. It is a statutory spend, not voluntary philanthropy.

A company that crosses the thresholds must adopt a CSR policy, set up a CSR committee or have the Board discharge its functions, spend 2 percent of its average net profit, route funds through registered agencies, and report it all. Getting the applicability, spend and filings right keeps the company compliant and avoids penalties and notices.

Key Terms for CSR Compliance:

CSR obligation: The 2 percent of three-year average net profit a company must spend on CSR.
Schedule VII: The list of activities on which CSR may be spent.
CSR-1: The MCA registration an implementing agency must hold to receive CSR funds.
CSR-2: The annual report on CSR the company files with the ROC.
Unspent CSR Account: The separate account for unspent amounts of an ongoing project.

Section 135 2% Spend

Who Must Comply with CSR?

CSR applies to a company that meets any one of the financial thresholds in the immediately preceding financial year.

Net worth: 500 crore or more.
Turnover: 1000 crore or more.
Net profit: 5 crore or more.
Any one is enough: Meeting even one threshold triggers CSR; the test is the preceding year, not a rolling average.
All company types: Private, public, Section 8 and a foreign company with a branch or project office in India can be covered.

CSR sits within the company’s wider yearly compliance; see our private limited company compliance service for the full cycle.

Our CSR Compliance Services

Service	What We Do
Applicability and Spend Computation	We test the thresholds against the preceding year and compute the 2 percent obligation on the Section 198 net profit.
CSR Policy and Committee	We draft the CSR policy aligned to Schedule VII and set up the CSR committee, or the Board process where the obligation is small.
CSR-1 Agency Checks	We verify that the implementing agencies are CSR-1 registered on the MCA before funds are routed to them.
Spend Tracking and Impact Assessment	We track the project-wise spend and arrange an impact assessment where the obligation crosses the threshold.
CSR-2 Filing and Disclosures	We prepare and file the CSR-2 annual report with the ROC and the CSR disclosure in the Board’s Report.
Unspent Transfers and Remediation	We manage the unspent-amount transfers within the timelines and help remediate any past shortfall or missed filing.

Our Process

CSR Compliance Process: Step by Step

How Patron runs the CSR cycle, from the applicability test and the 2 percent computation to the CSR-2 filing.

Step 1

Test Applicability

Check the net worth, turnover and net profit of the preceding year against the thresholds.

Preceding year Any one

Applicability 01

Step 2

Compute the 2 Percent

Calculate the obligation on the average Section 198 net profit of the last three years.

Section 198 3-year average

Compute 02

Step 3

Set Up Policy and Committee

Adopt the CSR policy and constitute the CSR committee, or run the Board process where the obligation is small.

CSR policy Committee

Policy 03

Step 4

Plan and Route the Spend

Plan Schedule VII projects and route funds only through CSR-1 registered agencies.

Schedule VII CSR-1 agency

Route 04

Step 5

Track and Assess

Track the project-wise spend and arrange an impact assessment where required.

Project-wise Impact

Track 05

Step 6

Handle Unspent Amounts

Transfer any unspent ongoing-project amount within 30 days and other unspent amounts within 6 months.

30 days 6 months

Unspent 06

Step 7

File and Disclose

File the CSR-2 annual report with the ROC and make the CSR disclosure in the Board’s Report.

CSR-2 Board Report

File 07

Information Required for CSR Compliance

Net worth, turnover and net profit of the preceding year.
Audited financials for the three preceding years for the 2 percent computation.
The CSR policy and CSR committee details.
Details and CSR-1 registration of the implementing agencies.
Project-wise spend records and any impact assessment.
Valid DSC of the signatory for the CSR-2 filing.

Need the full checklist? We share a tailored CSR checklist after reviewing your numbers.

Common CSR Challenges and Solutions

Challenge	Impact	How Patron Accounting Solves It
Getting applicability wrong	A common error is using a three-year average instead of the preceding year for the thresholds. We apply the correct test so applicability is right.
Wrong profit base	Using tax profit instead of the Section 198 net profit distorts the 2 percent. We compute it correctly.
Unregistered agency	Routing funds through an agency without CSR-1 is a compliance gap. We verify CSR-1 registration before any funds move.
Unspent amounts and missed CSR-2	Missed transfers and a missed CSR-2 draw notices and penalties. We manage the transfers and file CSR-2 on time, and remediate past gaps.

CSR Service Fees

Fee Component	Amount
Patron Accounting Professional Fees (annual)	Starting from INR 24,999 per year (Exl GST and Govt. Charges)
Scope	Applicability and computation, the policy and committee, the CSR-1 checks, the CSR-2 filing and the unspent-amount management for the year
Independent-agency impact assessment	Scoped and charged separately
MCA filing fees and large remediation of past shortfalls	Scoped and charged separately

All fees and charges listed are indicative only and do not constitute a binding offer. Final amounts may vary depending on the volume of work and the complexity involved.

An impact assessment by an independent agency, MCA filing fees, and a large remediation of past shortfalls are scoped and charged separately, since the workload depends on your CSR obligation, the number of projects and the state of any past compliance. Contact us for a detailed quote.

Get a free CSR Compliance consultation - Call +91 945 945 6700 or WhatsApp us. No-obligation assessment.

CSR Cycle at a Glance

Stage	Estimated Timeline
Start of year	Applicability and the 2 percent fixed from the preceding-year numbers
Through the year	Spend runs on Schedule VII projects via CSR-1 registered agencies
Within 30 days of FY end	Unspent ongoing-project amount transferred to the Unspent CSR Account
Within 6 months of FY end	Other unspent amounts transferred to a Schedule VII fund
Annual	CSR-2 filed with the ROC and the disclosure made in the Board’s Report

CSR is an annual cycle tied to the financial year. Applicability and the 2 percent are fixed at the start from the preceding-year numbers, the spend runs through the year on Schedule VII projects via CSR-1 agencies, and at year end any unspent ongoing-project amount is transferred within 30 days and other unspent amounts within 6 months. The CSR-2 annual report is then filed with the ROC and the disclosure made in the Board’s Report. We manage the cycle so each step lands on time.

Key Benefits

Why Choose Professional CSR Support

Applicability and 2% Computed Correctly

The thresholds are tested on the preceding year and the 2 percent is computed on the Section 198 net profit, not tax profit.

Policy, Committee and Schedule VII

The CSR policy, the committee or Board process, and the Schedule VII alignment of the projects are handled.

CSR-1 Checks and CSR-2 Filing

The implementing agencies are CSR-1 verified before funds move, and the CSR-2 annual report is filed with the ROC.

Unspent Transfers Managed

The unspent ongoing-project and other amounts are transferred within the 30-day and 6-month windows.

Penalty Risk Removed

Correct computation, registered agencies, timely transfers and filings avoid the civil penalty on the company and its officers.

Handled by Qualified CAs and CSs

The engagement is run end to end by qualified Chartered Accountants and Company Secretaries.

Trusted by Businesses Across India

10,000+ Businesses Served | 4.9 Google Rating | 50,000+ Documents Filed | 15+ Years

"We crossed the net profit threshold for the first time. Patron computed our 2 percent, set up the policy and committee and filed CSR-2." - Director, manufacturing company, Pune.

"We had an unspent ongoing-project amount at year end. Patron handled the transfer to the Unspent CSR Account within the window." - Founder, technology company, Bengaluru.

Trusted by leading brands including Hyundai, Asian Paints and Bridgestone for accounting and compliance support.

With offices in Pune, Mumbai, Delhi, and Gurugram, Patron Accounting serves businesses across India - both in-person and remotely.

CSR Forms and Transfers at a Glance

Item	What	Timeline or rule
CSR-1	Agency registration	Before the agency receives CSR funds
CSR-2	Annual report on CSR	Filed with the ROC each year
Unspent, ongoing	Transfer to Unspent CSR Account	Within 30 days of FY end
Unspent, other	Transfer to a Schedule VII fund	Within 6 months of FY end

Related Compliance Services

CSR sits within the company’s wider compliance and connects with the implementing-agency side. Patron handles both.

Private Limited Company Compliance for the full annual compliance cycle.
Secretarial Audit which reviews the CSR disclosures.
NGO Registration for an implementing agency that needs to be set up and CSR-1 registered.
Compliance Calendar to track CSR-2 and other due dates.
Pvt and LLP Compliance for ongoing entity compliance.

Legal and Compliance Framework

Applicability: Section 135 of the Companies Act, 2013 with the Companies (CSR Policy) Rules, 2014, as amended in 2021, applies to a company that, in the immediately preceding financial year, has a net worth of 500 crore or more, a turnover of 1000 crore or more, or a net profit of 5 crore or more.

Spend and policy: Such a company must constitute a CSR committee, adopt a CSR policy, and spend at least 2 percent of the average net profits of the three immediately preceding financial years, computed under Section 198, on Schedule VII activities, with the committee not mandatory where the obligation does not exceed 50 lakh.

Agencies and reporting: CSR funds may be routed only through agencies registered with the MCA in Form CSR-1, and the company files an annual report on CSR with the Registrar in Form CSR-2, in addition to the CSR disclosure in the Board’s Report.

Unspent amounts and penalty: Unspent amounts relating to an ongoing project are transferred to a separate Unspent CSR Account within 30 days of the financial year end and spent within three years, other unspent amounts go to a Schedule VII fund within 6 months, and non-compliance attracts a civil penalty on the company and its officers in default by reference to the unspent or transfer amount, subject to a cap. A Companies (Amendment) Bill, 2025 proposing lower thresholds is pending and not enacted, so the current thresholds above continue to apply.

Refer to the MCA portal for forms and to Section 135 on IndiaCode for the bare provision.

When does CSR apply to a company?

CSR under Section 135 applies to a company that, in the immediately preceding financial year, meets any one of three thresholds, a net worth of 500 crore or more, a turnover of 1000 crore or more, or a net profit of 5 crore or more. Meeting even one threshold triggers CSR for the company, and the test is the preceding year rather than a rolling average over several years.

How much must a company spend on CSR?

An eligible company must spend at least 2 percent of the average net profits made during the three immediately preceding financial years on CSR activities. The net profit for this purpose is computed under Section 198 of the Companies Act, which is different from the profit shown for tax, so using the right profit base is essential to arrive at the correct 2 percent obligation.

What are Forms CSR-1 and CSR-2?

CSR-1 is the registration form that an implementing agency, such as an NGO or trust, must file with the MCA to be eligible to receive CSR funds. CSR-2 is the annual report on CSR that the company itself files with the Registrar of Companies, in addition to the CSR disclosure in the Board’s Report. A company can route CSR spend only through CSR-1 registered agencies.

What happens to unspent CSR amounts?

Unspent amounts that relate to an ongoing project are transferred to a separate Unspent CSR Account within 30 days of the end of the financial year and must be spent within three years. Any other unspent amount is transferred to a fund specified in Schedule VII, such as the PM National Relief Fund, within 6 months of the end of the financial year, with the reasons disclosed in the Board’s Report.

Is a CSR Committee always required?

A company to which CSR applies generally constitutes a CSR Committee of the Board with three or more directors, including at least one independent director. However, where the amount the company is required to spend on CSR does not exceed 50 lakh rupees, a CSR Committee is not mandatory and its functions are discharged by the Board of Directors of the company.

What activities qualify as CSR?

CSR spend must be on the activities listed in Schedule VII of the Companies Act, which include areas such as eradicating hunger and poverty, education, healthcare, gender equality, environmental sustainability, and rural development. Ordinary business activities, brand promotion or customer-facing campaigns do not qualify as CSR, so the projects must be checked against Schedule VII.

Is an impact assessment required?

An impact assessment by an independent agency is required for a company that has an average CSR obligation of 10 crore or more in the three immediately preceding financial years, for CSR projects with an outlay of 1 crore or more that have been completed for at least a year. The assessment cost can be included in CSR spend up to the prescribed limit, within the overall rules.

What is the penalty for CSR non-compliance?

Since the 2021 amendments, CSR non-compliance is a civil default. The company faces a penalty linked to the amount it failed to spend or transfer, subject to a cap, and the officers in default face a smaller penalty, also capped. Beyond the monetary penalty, a missed spend, a wrong project classification or a missed CSR-2 commonly triggers an ROC notice, so timely compliance is important.

CSR kab lagu hota hai?

CSR tab lagu hota hai jab company ka net worth 500 crore, turnover 1000 crore ya net profit 5 crore me se koi ek pichhle saal me ho.

CSR me kitna kharch karna hota hai?

Company ko pichhle teen saal ke average net profit ka kam se kam 2 percent CSR par kharch karna hota hai.

Quick Answers

Applies if? Net worth 500 cr, turnover 1000 cr or profit 5 cr, any one.

Spend? 2 percent of 3-year average net profit.

Agency? Must be CSR-1 registered.

Report? CSR-2 to the ROC each year.

Why Get It Right

CSR is a measured, penalty-bearing obligation. Getting applicability or the 2 percent wrong, routing funds through an unregistered agency, missing the unspent-amount transfer or the CSR-2 filing all draw notices and civil penalties on the company and its directors. A planned annual process, with the right computation, agencies, transfers and filings, keeps the company compliant and the Board protected.

Manage your CSR compliance - Call +91 945 945 6700 or WhatsApp us. We respond within 2 hours.

Manage Your CSR Compliance with Patron Accounting

CSR under Section 135 is a structured annual obligation: it applies on any one of the net worth, turnover or profit thresholds, requires a 2 percent spend on Schedule VII activities through CSR-1 registered agencies, the CSR-2 annual filing, and the transfer of unspent amounts within 30 days or 6 months.

Done right, it is straightforward; done wrong, it brings notices and penalties. Patron Accounting, with qualified CAs and CSs and offices in Pune, Mumbai, Delhi and Gurugram, manages your CSR compliance end to end each year.

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CSR Compliance Support Across India

In-person and remote Section 135 CSR compliance support from our offices in Pune, Mumbai, Delhi and Gurugram.

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Content Created: 3 June 2026 | Last Updated: | Next Review: 4 September 2026 | Reviewed By: CA & CS Team, Patron Accounting LLP

This page is reviewed at least yearly or on rule change and updated whenever Section 135, the Companies (CSR Policy) Rules, 2014, the applicability thresholds, the 2 percent and Section 198 basis, the CSR-1 and CSR-2 forms, the unspent-amount rules, or the penalty provisions change. Freshness Tier 1.

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