Executive Summary:
This document, a response to Lok Sabha Unstarred Question No. 1196 on July 28, 2025, addresses Corporate Social Responsibility (CSR) compliance. It outlines the legal framework under Section 135 of the Companies Act, 2013, and related rules. It provides data on CSR expenditure and penalties for non-compliance over the last three financial years (FY 2021-22 to FY 2023-24) and reiterates existing provisions for corporate governance.
Key Points / Main Content:
CSR Framework:
* Governed by Section 135 of the Companies Act, 2013, Schedule VII, and Companies CSR Policy Rules, 2014.
* CSR is mandatory for companies meeting specific financial thresholds (net worth, turnover, or net profit).
* Requires a CSR Committee to formulate and recommend CSR policy.
* CSR is a Board-driven process with the Board responsible for planning, execution, and monitoring.
* Requires disclosure of CSR Policy in the Board report.
CSR Expenditure and Reporting:
* Mandates spending at least 2% of average net profits from the preceding three financial years on activities specified in Schedule VII.
* Unspent amounts must be transferred to designated funds within a prescribed time limit.
* Companies with significant CSR obligations must undertake impact assessments of their projects through independent agencies.
* Details of CSR activities and impact assessments are to be reported in the Annual Report on CSR.
* CSR expenditure data is publicly available on www.csr.gov.in.
Penalties for Non-Compliance:
* Penal action is initiated following due process of law based on examination of records or complaints.
* In the last three years, 30 companies were penalized, with a total penalty of Rs. 19.94 crore imposed.
Corporate Governance:
* The Companies Act, 2013, contains provisions for good corporate governance, including accountability, transparency, and independent audit.
* Mandates preparation and maintenance of books of account, statutory returns, and registers.
* Requires disclosures in the Board's report, financial statements, and annual returns.
* Requires the appointment of independent directors and the constitution of various board committees.
Role of Independent Directors, Audit Committees, and Statutory Auditors:
* The Act provides for the role and accountability of Independent Directors, Audit Committees, and Statutory Auditors.
* Audit Committees are responsible for examining financial statements and auditor's reports.
* Statutory auditors are required to audit the books of accounts of the company.
CSR Expenditure Data (FY 2021-22 to FY 2023-24):
* Development Sector-wise: Education, Health care, Environmental sustainability, and Vocational skills were key areas of CSR expenditure.
* State-wise: Maharashtra, Pan India projects, Gujarat, Tamil Nadu, and Karnataka saw the highest CSR expenditure.
Impact Analysis
Companies Mandated for CSR:
Impact: Required to comply with Section 135 of the Companies Act, 2013, including forming a CSR committee, spending a minimum amount on CSR activities, and reporting on these activities.
Action Required: Ensure compliance with CSR provisions, including expenditure, reporting, and impact assessment requirements.
Boards of Directors:
Impact: Empowered to plan, decide, execute, and monitor CSR activities based on the recommendations of its CSR Committee.
Action Required: Oversee CSR activities, ensure compliance, and disclose the CSR Policy in the Board report.
CSR Committees:
Impact: Responsible for formulating and recommending the CSR policy.
Action Required: Develop and recommend a CSR policy to the Board.
Independent Agencies:
Impact: May be engaged to conduct impact assessments of CSR projects.
Action Required: Conduct impact assessments as per Rule 8 of the Companies CSR Policy Rules, 2014.
Statutory Auditors and CFOs:
Impact: CFOs are required to certify CSR expenditure and statutory auditors are required to audit CSR expenditure.
Action Required: Certify and audit CSR expenditures to ensure transparency and accountability.
Government and Regulatory Bodies:
Impact: Responsible for enforcing CSR provisions and taking penal action for non-compliance.
Action Required: Monitor CSR compliance and take action against defaulting companies.
Key Entities Referenced
Companies Act, 2013: An Act of Parliament of India that regulates Indian companies.
Corporate Social Responsibility (CSR): A form of corporate self-regulation integrated into a business model.
Ministry of Corporate Affairs: The Indian government ministry responsible for administering the Companies Act 2013 and other laws related to corporations.
Section 135: A section of the Companies Act, 2013 that mandates Corporate Social Responsibility (CSR) spending by companies meeting certain financial thresholds.
Companies CSR Policy Rules, 2014: Rules framed under the Companies Act, 2013, that provide the framework for Corporate Social Responsibility (CSR) policy and implementation.
Schedule VII: A schedule of the Companies Act, 2013, that enlists the areas or subjects that may be undertaken by a company as part of its Corporate Social Responsibility (CSR) activities.
Maharashtra: A state in India with the highest CSR expenditure.
Uttar Pradesh: A state in India. CSR expenditure from FY 202122 to FY 202324 is given in the document.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
LOK SABHA
UNSTARRED QUESTION NO. 1196
ANSWERED ON MONDAY, July 28, 2025/Sravana 6, 1947 (Saka)
COMPANIES PENALISED FOR NON-COMPLIANCE OF CSR
QUESTION
1196. SHRI K SUDHAKARAN:
SHRI TANUJ PUNIA:
SMT. GENIBEN NAGAJI THAKOR:
SHRI ANTO ANTONY:
SHRI TANGELLA UDAY SRINIVAS:
SHRI BENNY BEHANAN:
DR. PRASHANT YADAORAO PADOLE:
SHRI BALWANT BASWANT WANKHADE:
Will the Minister of CORPORATE AFFAIRS be pleased to state:
(a) the number and total value of Corporate Social Responsibility (CSR) projects
reported as unspent or non-compliance during the last three years including
reasons for unspent funds and the nature of non-compliance, State-wise and year-
wise;
(b) the number of companies penalised for non-compliance under Section 135 of
the Companies Act during the above period, along with the details of penalties
imposed and the size or type of companies most frequently penalised, company-
wise;
(c) whether any specific sectors or regions have shown recurring
underperformance in CSR compliance and if so, the details thereof including
potential causes and trends observed;
(d) the measures taken by the Government or regulatory bodies to address CSR
non-compliance including any policy changes or enforcement actions introduced
during the last three years;
(e) whether the Government has undertaken any assessment of the corporate
Governance framework and if so, the key findings thereof along with the steps
taken by the Government to strengthen Corporate Government and transparency
among registered companies in the country; and
(f) the steps taken by the Government to strengthen the role and accountability of
Independent Directors, Audit Committees and Statutory Auditors including any
recent guidelines or proposed amendments?
contd….2/--2-
ANSWER
MINISTER OF STATE IN THE MINISTRY OF CORPORATE AFFAIRS AND MINISTER
OF STATE IN THE MINISTRY OF ROAD TRANSPORT AND HIGHWAYS
[SHRI HARSH MALHOTRA]
(a) to (d): The legal framework for Corporate Social Responsibility (CSR) has been
provided under Section 135 of the Companies Act, 2013 (‘Act’), Schedule VII of the
Act and Companies (CSR Policy) Rules, 2014. Schedule VII of the Act enlists areas
or subjects that may be undertaken by a company as CSR. Every CSR mandated
company having net worth of Rs. 500 crore or more or turnover of Rs. 1000 crore
or more or net profit of Rs. 5 crore or more during immediately preceding financial
year shall ensure that it spends, in every financial year, at least 2% of the average
net profits of the company made during the three immediately financial years on
the activities in areas or subjects specified in Schedule VII of the Act. CSR
mandated company has to constitute a CSR Committee. The Committee shall
formulate and recommend the CSR policy.
Under the Act, CSR is a Board driven process and the Board of the company is
empowered to plan, decide, execute and monitor the CSR activities based on the
recommendations of its CSR Committee. The existing legal provisions formation of
CSR committee, formulation of CSR policy, Annual Action Plan on CSR,
identification of the project and area in which project will be implemented,
certification of CSR expenditure by Chief Financial Officer (CFO) and audit of CSR
expenditure by statutory auditors etc. provide adequate mechanisms to ensure
transparency and accountability. The Board has to ensure that the approved
amount has been spent on the assigned activity(ies). In case any amount remains
unspent then such amount shall be transferred in the designated fund(s) in
Schedule VII in the prescribed time limit. The Government does not issue any
directions to Corporates to spend in any particular area or activity.
The Board of the company is required to disclose the CSR Policy implemented by
the company in its Board report. Rule 8 of the Companies (CSR Policy) Rules, 2014
contains provisions related to impact assessment of CSR projects that every
company having average CSR obligation of 10 crore rupees or more in pursuance
of sub-section (5) of section 135 of the Act, in the three immediately preceding
financial years, shall undertake impact assessment, through an independent
agency, of their CSR projects having outlays of one crore rupees or more, and which
have been completed not less than one year before undertaking the impact study.
The details of CSR activities, Impact Assessment etc. are required to be reported
by the companies in the ‘Annual Report on CSR’ including an annual action plan on
CSR which is part of the Company’s Board Report.
Contd…3/-3-
All data related to CSR expenditure filed by companies in MCA21 registry is
available in public domain at www.csr.gov.in. On the basis of annual filings made
by companies in the MCA21 registry, the Development Sector-wise and State-wise
CSR expenditure for the last three Financial Years i.e. FY 2021-22 to FY 2023-24
is attached at Annexure-I and Annexure-II respectively.
Penal action is initiated as per provisions of the Act, following due process of law
after examination of records and / or receipt of complaint against the companies
and officers-in-default. In the last three years 30 public and private companies
penalised and penalty amount of Rs.19.94 crore has been imposed.
(e): The Companies Act, 2013 and rules made thereunder contain adequate provisions
for ensuring good corporate governance including through accountability,
transparency, independent audit and role of Independent Directors, Committees of
the Board etc. It provides for accountability to the Board of directors. The Act and
Rules require that the companies have to prepare and maintain the books of
account, statutory returns and registers etc. in the prescribed format their
registered office and to comply with the applicable accounting standards. The
disclosures in the Board's report including on risk management, financial
statements and annual returns have also been mandated to ensure that every
relevant information is available to the stakeholders as well as in the MCA21. The
companies are required to file audited Annual Financial Statements, resolutions
passed and statutory returns etc. with MCA21. The Act also requires to appoint
independent Directors and constitute various committees of the Board viz. Audit
Committee, Nomination and Remuneration Committee, Stakeholders Relationship
Committee etc. for class of companies. The provisions of the Act are reviewed by
the Government from time to time.
(f): The Companies Act, 2013 and Rules made thereunder inter-alia, provides for
role and accountability of Independent Directors, Audit Committee and Statutory
Auditors. These provisions are aimed at ensuring good corporate governance
through representation and participation by Independent Directors on the Board of
Directors and Audit Committees. The role of the Audit Committee includes
examination of financial statements, auditor's report, related party transactions
etc. Further, the Companies Act, 2013 provides requirements for every company
to appoint statutory auditors to carry out the audit of books of accounts of the
company.
*****Annexure-I
Refer to part (d) of Lok Sabha Unstarred Question no. 1196 for 28.07.2025
Development Sector-wise CSR expenditure from FY 2021-22 to FY 2023-24
(Amount in Rupees Crore)
FY FY FY
Sl. No. Development Sector
2021-22 2022-23 2023-24
1. Agro forestry 35.52 67.28 74.47
2. Animal welfare 174.35 325.44 531.14
Armed Forces, Veterans, War
3. 47.65 63.63 68.04
Widows/ Dependants
4. Art and culture 260.39 449.21 704.04
5. Conservation of natural resources 274.90 584.65 423.47
6. Education 6,719.89 10,414.93 12,134.57
7. Environmental sustainability 2,441.82 2,008.04 2,429.97
8. Gender equality 104.97 121.15 204.17
9. Health care 8,049.49 7,023.60 7,150.81
10. Livelihood enhancement projects 880.50 1,703.64 2,360.09
Poverty, Eradicating Hunger,
11. 1,903.78 1,282.73 1,233.93
Malnutrition
12. Rural development projects 1,847.07 2,059.41 2,408.09
13. Safe drinking water 192.34 252.78 327.45
14. Sanitation 314.53 438.81 375.23
15. Senior Citizens Welfare 80.34 153.91 159.82
Setting up homes and hostels for
16. 101.00 49.50 41.80
women
17. Setting up orphanage 27.54 44.99 31.57
18. Slum area development 58.38 94.22 38.82
19. Socio-economic equalities 165.30 159.19 200.81
20. Special education 191.08 319.50 396.57
21. Technology incubators 8.57 1.48 1.91
22. Training to promote sports 311.71 542.53 692.09
23. Vocational skills 1,053.80 1,206.75 1,396.55
24. Women empowerment 264.94 417.26 454.22
25. Other Central Government Funds 1,631.01 1,145.78 1,000.83
26. NEC/Not mentioned* 0.59 1.65 68.32
Total 27,141.45 30,932.08 34,908.75
(Data upto 31.03.2025) (Source: Corporate Data Management Cell)
* Companies either did not specify the names of sectors or indicated more than
one sector where projects were undertaken.
*****Annexure-II
Refer to part (d) of Lok Sabha Unstarred Question no. 1196 for 28.07.2025
State-wise CSR expenditure from FY 2021-22 to FY 2023-24
(Amount in Rupees Crore)
FY FY FY
S.No. States/ UTs
2021-22 2022-23 2023-24
1. Andaman And Nicobar 9.71 2.53 3.03
2. Andhra Pradesh 663.50 986.77 1,129.75
3. Arunachal Pradesh 119.42 13.36 39.57
4. Assam 406.42 474.96 488.62
5. Bihar 178.97 241.41 260.53
6. Chandigarh 51.19 18.44 113.31
7. Chhattisgarh 317.70 609.08 422.73
8. Dadra and Nagar Haveli & Daman and
18.27 23.22 30.17
Diu
9. Delhi 1,198.50 1,517.07 1,949.95
10. Goa 45.43 60.91 85.79
11. Gujarat 1,613.18 2,060.02 2,707.54
12. Haryana 687.13 720.38 816.95
13. Himachal Pradesh 140.27 141.40 148.59
14. Jammu and Kashmir 50.68 72.19 98.54
15. Jharkhand 243.95 389.65 414.63
16. Karnataka 1,849.82 2,058.73 2,254.88
17. Kerala 241.58 362.85 387.91
18. Lakshadweep 0.97 0.02 0.36
19. Leh & Ladakh 14.84 11.72 30.41
20. Madhya Pradesh 427.48 668.32 600.47
21. Maharashtra 5,407.40 5,705.54 6,065.95
22. Manipur 15.62 53.60 83.19
23. Meghalaya 19.63 22.94 30.94
24. Mizoram 6.94 11.01 4.48
25. Nagaland 12.46 13.57 15.41
26. Odisha 752.37 994.82 1,389.39
27. Puducherry 9.31 14.29 32.68
28. Punjab 185.41 263.51 351.89
29. Rajasthan 713.85 1,122.65 1,145.67
30. Sikkim 28.24 36.18 41.87
31. Tamil Nadu 1,441.03 1,637.12 1,968.76
32. Telangana 688.58 1,040.61 1,054.92
33. Tripura 15.91 19.26 9.45
34. Uttar Pradesh 1,345.02 1,213.12 1,545.01
35. Uttarakhand 228.09 307.60 360.76
36. West Bengal 571.89 782.74 862.57
37. PAN India* 5,789.58 6,104.58 6,960.21
38. PAN India (Other Centralized Funds) 1,631.01 1,145.78 1,000.83
39. NEC/Not Mentioned* 0.09 10.12 1.06
40. Total 27,141.45 30,932.08 34,908.75
(Data upto 31.03.2025) (Source: Corporate Data Management Cell)
* Companies either did not specify the names of State/UT or indicated more than one
State/Ut where projects were undertaken.
*****