Corporate Social Responsibility (CSR)

  • Corporate Social Responsibility (CSR)

Corporate social responsibility (CSR) is a self-regulating business model that helps a company be socially accountable—to itself, its stakeholders, and the public. By practicing CSR, also called corporate citizenship, companies can be conscious of the kind of impact they are having on all aspects of society including economic, social, and environmental.

CSR registration under the Companies Act, 2013 is a mandatory requirement for all companies having a net worth of more than Rs. 500 crore or a turnover of more than Rs. 1,000 crore or a paid-up capital of more than Rs. 500 crore. The registration process is as follows:
The company needs to apply for CSR registration with the Ministry of Corporate Affairs (MCA).
The application form must be accompanied by the following documents:

  1. A copy of the company’s certificate of incorporation
  2. A copy of the company’s latest balance sheet and profit and loss account
  3. A copy of the company’s CSR policy
  4. A copy of the company’s CSR budget
  5. The MCA will review the application and may ask for additional information or clarification

If the application is approved, the company will be issued a CSR registration certificate.

The benefits of CSR registration include:

  • Compliance with the law
  • Improved reputation and brand image
  • Increased employee morale and productivity
  • Reduced risk of legal action
  • Access to government funding and grants
  • Increased opportunities for business partnerships

CSR registration is a valuable way for companies to demonstrate their commitment to social responsibility. By taking the time to register for CSR, companies can reap the many benefits that it has to offer.
Here are some additional information about CSR registration under the Companies Act, 2013:

  • The CSR policy must be in line with the company’s overall business objectives.
  • The CSR budget must be at least 2% of the company’s net profit.
  • The CSR funds must be used for activities that benefit the community, such as education, health, and environment.
  • The company must report on its CSR activities to the shareholders and the MCA.
  • CSR registration is an important step for companies that want to be socially responsible. By taking the time to register for CSR, companies can make a positive impact on the communities in which they operate.

How to Calculate 2% of Net profit

Corporate Social Responsibility (CSR) is a business model that aims to make a positive impact on society and the environment. CSR can help companies improve their image, earn customer loyalty, and generate more sales.

In India, companies are required to spend at least 2% of their net profit over the previous three years on CSR. The CSR amount is calculated as 2% of the average profit before tax over the previous three years.

CSR can include:

  • Promoting policies and programs that support diversity, equity, and inclusion
  • Treating employees, users, and communities fairly

CSR can help companies balance economic, ecological, and social goals. This can help companies be more conscious of their social and moral responsibilities.


The Companies Act of 2013 requires companies to spend 2% of their profits on Corporate Social Responsibility (CSR). The CSR amount is calculated as 2% of the average net profits over the previous three financial years. The average profit is calculated as profit before tax.

For example, if a company is incorporated in FY 2018-19 and is covered under section 135(1) for FY 2020-21, the CSR spending obligation would be at least 2% of the average net profits made during FY 2018-19 and FY 2019-20.

The computation of net profit for CSR is as per Section 198 of the Companies Act, 2013. Net profit does not include any dividend received.
If a company spends more than 2% of average net profit in a financial year, the excess amount can be set off against the requirement of CSR expenditure up to FY 2023-24.

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