Question 1

How is CSR budget calculated in India?

Accepted Answer

A company's CSR budget is 2% of the average net profit of the three immediately preceding financial years, computed under Section 198 of the Companies Act, 2013. Section 198 profit is different from book profit and taxable profit. If the company is younger than three years, the average is taken over the years available.

Question 2

Which companies must spend on CSR in 2026?

Accepted Answer

CSR under Section 135 applies to any company that, in the immediately preceding financial year, had a net worth of ₹500 crore or more, turnover of ₹1,000 crore or more, or net profit of ₹5 crore or more. Meeting any one of the three thresholds triggers the obligation, and applicability is assessed afresh every financial year.

Question 3

Is a CSR committee mandatory for every company?

Accepted Answer

No. A CSR Committee is mandatory only when the company's CSR obligation is ₹50 lakh or more. Below that amount, the Board of Directors discharges the functions of the CSR Committee directly.

Question 4

What is the penalty for not spending CSR?

Accepted Answer

Under Section 135(7), the company is liable to a penalty of twice the unspent or untransferred amount or ₹1 crore, whichever is less. Every officer in default is liable to one-tenth of that amount or ₹2 lakh, whichever is less. Paying the penalty does not cancel the obligation — the amount must still be spent or transferred.

Question 5

When is CSR impact assessment mandatory?

Accepted Answer

Impact assessment by an independent agency is mandatory when a company's average CSR obligation over the three preceding financial years is ₹10 crore or more, for every CSR project with an outlay of ₹1 crore or more. The cost of the assessment can be booked as CSR expenditure up to 2% of total CSR spend or ₹50 lakh, whichever is higher.

Question 6

Can excess CSR spending be carried forward?

Accepted Answer

Yes. Any amount spent in excess of the mandatory 2% can be set off against the CSR obligation of up to three succeeding financial years.

Question 7

Can CSR money be given to any NGO?

Accepted Answer

No. CSR funds can only be routed through implementing agencies holding a valid CSR-1 registration with the Ministry of Corporate Affairs, typically NGOs that are also 12A and 80G registered. Marpu Foundation is a CSR-1 registered implementing partner (CSR00050243).

Question 8

What happens to unspent CSR money?

Accepted Answer

If the unspent amount relates to an ongoing project, it must be transferred to an Unspent CSR Account within 30 days of the financial year ending and spent within the next three financial years. If it is not tied to any ongoing project, it must be transferred to a Schedule VII fund such as the PM's National Relief Fund within six months of the financial year ending.

Marpu Foundation

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