Corporate Social Responsibility

Corporate Social Responsibility

Corporate Social Responsibility

CSR or Corporate Social Responsibility is a business paradigm that companies observe to combine environmental and social concerns in their business functioning. Corporate Social Responsibility is a Company’s attempt to pay back the public and stakeholders, who participated in their success and growth. CSR can not be called charity. CSR is a procedure to make social good towards many aspects of society and the environment. This business model also helps companies to make brand name towards its customers and also strengthen the growth and goodwill between the general public.

Ministry of Corporate Affairs (MCA) has made CSR compulsory for certain set of Companies from 1st April 2014 according to the provisions of Section 135 of the Companies Act 2013 along with Companies(Corporate Social Responsibility Rules) 2014 and Schedule VII.


According to section 135 of the Act and rules made thereunder, Corporate Social Responsibility norms are applicable on companies which have (i) net worth of Rs 500 Crore or more; (ii) net profit of Rs 5 Crore or more; or (iii) turnover of Rs 1000 Crore or more.


The companies which are crossing the prescribed threshold, are needed to spend at least 2% of their average net profit for the immediately preceding three financial years on the activities CSR. Such expenses incurred on the activities of CSR can not be taken as expenses incurred by the company being an assessee for the purposes of the business or profession. Moreover, specific tax exemptions have not been extended to CSR expenditure per se.

Penal provisions

Currently, under CSR norms there is no penal provision for non-compliance. Though, penalties can be levied of the Act for not making the needed disclosures in Board's report on a yearly basis besides prosecution of the officers of the company in default.

CSR Policy

The CSR Policy of the company shall comprise the following -

  1. a list of CSR programs or projects which a company prepares to take on falling under the Schedule VII of the Act,
  2. the monitoring procedure of such programs or projects.
  3. that the surplus emerging out of the CSR programs or projects or activities shall not make part of the business profit of the company.
CSR Committee
  1. A Company has to establish a Corporate Social Responsibility Committee consisting of 3 directors about whom 1 should be an independent director.
  2. In the case of Unlisted Public Company or Private Company where it is not a requirement to appoint independent directors, can establish Corporate Social Responsibility Committee without such director.
  3. In the case of Private Company in which there are only 2 directors can establish the Corporate Social Responsibility Committee with only 2 directors.
  4. In case of Foreign Company, Corporate Social Responsibility Committee shall be established by at least 2 persons, of which 1 person should be its authorized individual resident in India [Section 380(1)(d)] and the other individual should be nominated by foreign Company.
Amendments To The Policy

The Board of Directors can on the recommendation of CSR committee or on its own alter its policy as and when required necessary. Any or all provisions of CSR Policy would be subjected to alteration or revision according to the regulations on the matter as may be issued from appropriate statutory authorities, from time to time.

Benefits of CSR to Companies:
  1. Optimistic business reputation
  2. Increasing sales and loyalty of customers
  3. Operational costs savings
  4. Better brand identification
  5. Progressive financial performance
  6. Organisational growth
  7. Greater potential to attract skills and talent and retain staff
Examples of CSR in India

Ultratech Cement:

Ultratech Cement is India’s biggest cement company which is involved in social action across Four Hundred Seven villages in the state having the aim to generate self-reliance and sustainability. Its activities regarding CSR aims at education, healthcare, environment, family welfare program, infrastructure, sustainable livelihood and social welfare. The Company has also arranged sanitization programs, medical camps, school enrollment, immunization programs, organic farming programs, industrial training, plantation drives and water conservation programs.

Mahindra & Mahindra:

Mahindra and Mahindra is an Indian automobile manufacturer which established the K. C. Mahindra Education Trust in 1954, followed by Mahindra Foundation in 1969 with the aim of promoting education. The company firstly focuses on education programs to aid socially and economically depressed communities. Mahindra and Mahindra CSR programs invest in grants and scholarships, livelihood training, healthcare for remote areas, disaster relief programs and water conservation. Mahindra and Mahindra run projects such as Nanhi Kali which focuses on education for girls, Lifeline Express for healthcare services in remote areas and Mahindra Pride Schools for industrial training.