CSR is not just a donation budget. Section 135 creates a board-governance and reporting framework where applicability, committee, policy, spending and unspent amount tracking all matter.
Section 135 applies to companies meeting specified net worth, turnover or net profit thresholds and requires CSR governance. It also states that the Board shall ensure spending in every financial year of at least two per cent of the average net profits of the company made during the three immediately preceding financial years, subject to the provision.
| Control | Why it matters |
|---|---|
| Applicability test | Check net worth, turnover and net profit triggers. |
| CSR committee / board governance | Set up oversight where required. |
| CSR policy and project selection | Support eligible CSR activity and approval. |
| Spend tracker | Track 2% computation, actual spend and unspent amount. |
| Board report disclosure | CSR reporting must align with accounts and governance records. |
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Section 135 of the Companies Act covers corporate social responsibility.
Section 135 refers to at least 2% of average net profits of the three immediately preceding financial years, subject to the provision.
No. Finance, board/CSR committee and compliance teams should jointly control it.