Corporate Social Responsibility is a mandatory compliance to be fulfilled by eligible companies under Section 135 of the Companies Act, 2013. Certain companies have to spend 2% of their average net annual profits made during the three immediately preceding financial years, on CSR funds for undertaking CSR projects in India. These include companies that fulfil any of the following conditions:
- Companies having a net worth of Rs.500 crores or more,
- Turnover of Rs.1000 crores or more,
- Net profit of Rs.5 crores or more,
during the immediately preceding financial year. CSR funds can be utilised by companies which undertake CSR activities themselves, or can be granted to NGOs which companies outsource their CSR activities to. For this purpose, the concerned NGOs will be required to obtain registration as “Bodies undertaking CSR activities” with the ROC. The regulation regarding CSR Registration for NGOs was introduced on the 1st of April, 2021. Under the instant scheme the eligible NGO has to register itself with the ROC by filing CSR-1 Application.
Applicability of Form CSR-1
The Rules provides that a Board of a company should ensure the company itself undertakes the CSR activities or through:
- A registered society, registered public trust, Section 8 company or established under Section 12A and 80G of the Income Tax Act, 1961, incorporated by the company.
- A company registered under Section 8 of the Act, a registered society or registered trust established by the Central or State Government.
- Entities established under a State Legislature or Act of Parliament.
- A Section 8 company, registered society, registered public trust or company registered under Section 12A and 80G of the Income Tax Act with an established track record of at least three years in undertaking similar activities.
Thus, a company can undertake a CSR activity on its own or through a company registered under Section 8, registered society, public trust or an NGO as mentioned above. All these entities mentioned above or the company that intends to undertake a CSR activity should mandatorily register themselves with the Registrar of Companies by filing the Form CSR-1 electronically.
Eligibility for CSR-1 Filing with the ROC
- A section 8 company Registered under section 12A and 80G of the Income Tax and have at least 3 years of undertaking charitable activities.
- A registered public trust Registered under section 12A and 80G of the Income Tax and have at least 3 years of undertaking charitable activities.
- A registered society Registered under section 12A and 80G of the Income Tax and have at least 3 years of undertaking charitable activities.
Contents of Form CSR-1
- Nature of the entity.
- CIN number or registration number of the entity.
- Date of Incorporation, address and email ID of the entity.
- PAN of the entity.
- Details of directors, chairman, board of trustees, secretary, CEO or authorised representatives of the entity.
- DIN (Director Identification Number) and DSC (Digital Signature Certificate) of the signing director.
- Certification by a practising professional.
Process of Online CSR Registration
- he applicant needs to visit the MCA portal and click on the ‘MCA Services’ tab.
- Choose the option ‘e-Filing’ from the drop-down list and click on the ‘Company Forms Download’ option.
- Scroll down the page to the ‘Incorporation services’ heading and click on the ‘Form CSR-1’ under the ‘e-Form’ row to download the form.
- The Form CSR-1 will be downloaded in a zip folder.
- Open the zip folder named ‘Form_CSR-1’ and extract the ‘Form_CSR-1’ pdf form.
- After extracting the pdf form CSR-1, open the form and fill it.
- The eForm CSR-1 needs to be verified digitally by a Chartered Accountant (CA), Company Secretary (CS), or a Cost Accountant (CA) in practice.
- After verification of the form by a CA, CS or cost accountant, submit the Form CSR-1 on the portal.
- A unique CSR Registration Number will automatically be generated by the system upon submission of the form.
Documents required for Form CSR-1 Filing Process
- Copy of the registration certificate
- Copy of the PAN of the NGO with Form CSR-1
- DIN/PAN of the Director, Trustee, Secretary, etc. of the organization
- Copy of the Resolution authorizing the person by the entity with Resolution number and date of the resolution
- DSC of the person
CSR-1 Registration Benefits for NGOs
- Transparency in CSR funding- CSR Registration with the ROC makes the process of transfer of CSR funds completely transparent.
Improved Public Image- Donors can rely more on NGOs that have a credible reputation among the public.
Secured Corporate Funding- CSR grants guarantee corporate funding for NGOs, preventing funding shortage at any point of time.
Enhanced Goodwill-Enhanced goodwill promotes the objective and purpose of your organisation.
FAQs
What is CSR eligibility for receiving funds?
To be eligible for receiving CSR funds in India, an organization must meet the following criteria: a. It should be registered as a trust, society, or nonprofit Section 8 company b. It should have a clear and well-defined CSR policy that aligns with Schedule VII of the Companies Act, 2013. c. It should have a track record of at least three years of undertaking permitted social activities. d.It should have 12 A and 80 G Registration Certificates.
What are the permitted activities for CSR?
Following are the permitted activities under CSR for companies:
- Providing education
- Promoting gender equality
- Projects related to rural development
- Contribution to PM Cares Fund
- Contribution towards projects with positive environmental impacts
- Promotion of healthcare, preventive healthcare and sanitation activities related to COVID-19
- Events related to disaster management, including relief activities
What activities are prohibited to be considered as CSR contributions of companies?
Following are the prohibited activities under CSR for companies:
- Normal Business Activities of Business
- Activities that are undertaken outside India
- Contribution to a Political Party
- Activities benefiting employees of the company
- Activities that give marketing benefit to the company
- Activities that are done due to any statutory obligation.
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