Corporate Social Responsibility
Adv Akansha Vajpayee

Corporate Social Responsibility

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Introduction :Corporate Social Responsibility 


In India, what does corporate social responsibility, or CSR, mean?

Indian law mandates Corporate Social Responsibility for companies incorporated under Section 135 of the Companies Act, 2013. Every business that is registered under the statute is required to adhere to CSR.


Businesses must abide by this self-regulatory paradigm in order to be held socially responsible by the organisation, its stakeholders, and the general public. Adherence to Indian legislation is vital for all companies.


CSR initiatives support preserving a positive environmental impact. Businesses have an obligation to consider the environment and community. Companies that meet the requirements must spend a minimum of 2% of their average net earnings, as per Indian law. Through CSR, businesses may demonstrate their genuine social responsibility and have a positive impact on the community. 

The goals of corporate social responsibility (CSR) in India

Giving back to the community the resources and space it gives is one of the main goals of CSR activities. By planning events that are necessary to uphold community norms, it enhances the community. It is an advantageous thing for society. Every donation provided by the groups results in a positive development that society need. But if we discuss how CSR is a fantastic addition to society. It fulfils the function of being an excellent business model for companies. CSR is a commercial endeavour that extends a warm greeting to prospective clients and raises the company's investment rate. Corporate Social Responsibility (CSR) shapes the business landscape such that the company gains recognition and generates revenue.


Corporate Social Responsibility (CSR) Benefits in India


It enhances the brand's face value and cultivates a favourable perception of the company in the community

possesses excellent skills at drawing in new and prospective clients

increases the rate of staff retention and draws in new hires

provides an opportunity for businesses to present themselves to the market

improves society as a place to live

Businesses that must engage in CSR initiatives

The provisions of CSR are covered by Section 135 of the Companies Act of 2013. According to section 135, each and every business must have one of the following:


A minimum of Rs 500 crore in net worth, Rs 1000 crore in turnover, or Rs 5 crore in net profit

should form a committee during the previous fiscal year. CSR initiatives will fall within the purview of such committee. The procedure for these activities is governed by law. Every single business listed above is required to abide by the law.


Legal Requirements that the Company Must Meet in Order to Adhere to Corporate Social Responsibility


Should the corporation meet the previously stated requirements, the committee ought to comprise of a minimum of three directors, one of whom should be an independent. It must have two or more directors if it is a listed company and at least one-third of the total number of directors are independent directors as defined by subsection (4) of Section 149. To properly conduct a CSR activity in accordance with the law, a Company must satisfy a number of essential legal conditions.


CSR Guidelines


The following is required of the company, per the section:


Create a CSR policy that outlines all the actions the business will engage in while it is operating.

Suggest how much should be spent on the various activities. The corporation is required to spend a minimum of 2% of its net profit.

Keep an eye on the policy promptly.

Board Authority

As soon as the policy is created, the Board will


Accept the suggestions, approve the policy, and publish the policy's contents in the board report required by Section 134 of this act.

Make sure the business follows the aforementioned guidelines.

The board must guarantee that the company spends a minimum of 2% of its average net earnings each fiscal year. In addition, if the business is new, it must spend 2% of its average net profit from the three fiscal years that came before.


It is advised that the business prioritise the communities that surround the regions in which it conducts business. A corporation must explain any non-compliance, including failure to spend the allocated money, in the Board Report. The remaining funds must be utilised within three fiscal years of the date of transfer and deposited into a bank's "Unspent Corporate Social Responsibility Account."


Penalties for Failure to Comply


A firm that violates Section 135's restrictions faces the penalties outlined in Subsection (6) of that section, which stipulates that a fine of at least Rs 50,000 and up to Rs 25 lakh may be imposed. Any officer found to have engaged in such non-compliance faces a minimum three-year prison sentence, a fine of at least Rs. 50,000 that can go up to Rs. 5 lakh, or both.


In the event that any of the aforementioned provisions are broken, the MCA has the authority to issue directives to comply.




The laws pertaining to land control CSR activities. The Companies Act of 2013 enforces the obligations placed on companies by Indian law. Companies can demonstrate their care for society and receive the desired accolades by using CSR as a platform. It's a fantastic return on investment strategy that works similarly to changing society. These practices are governed by well-informed Indian law. This makes it simple for businesses to follow the guidelines on a daily basis. 

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