General Circular No. 21/2014:Clarifications with regard to provisions of Corporate Social Responsibility under section 135 of the Companies Act, 2013.
June, 23rd 2014
General Circular No. 21/2014
No. 05/01/2014- CSR
Government of India
Ministry of Corporate Affairs
5th Floor, `A' Wing,
Shastri Bhawan, Dr. R. P. Marg
New Delhi - 110 001
Dated: 18th June, 2014
All Regional Director,
All Registrar of Companies,
Subject: - Clarifications with regard to provisions of Corporate Social Responsibility under
section 135 of the Companies Act, 2013.
This Ministry has received several references and representation from stakeholders
seeking clarifications on the provisions under Section 135 of the Companies Act, 2013 (herein
after referred as `the Act') and the Companies (Corporate Social Responsibility Policy) Rules,
2014, as well as activities to be undertaken as per Schedule VII of the Companies Act, 2013.
Clarifications with respect to representations received in the Ministry on Corporate Social
Responsibility (herein after referred as (`CSR') are as under:-
(i) The statutory provision and provisions of CSR Rules, 2014, is to ensure that while
activities undertaken in pursuance of the CSR policy must be relatable to Schedule VII
of the Companies Act 2013, the entries in the said Schedule VII must be interpreted
liberally so as to capture the essence of the subjects enumerated in the said
Schedule. The items enlisted in the amended Schedule VII of the Act, are broad-based
and are intended to cover a wide range of activities as illustratively mentioned in the
(ii) It is further clarified that CSR activities should be undertaken by the companies in
project/ programme mode [as referred in Rule 4 (1) of Companies CSR Rules, 2014].
One-off events such as marathons/ awards/ charitable contribution/ advertisement/
sponsorships of TV programmes etc. would not be qualified as part of CSR
(iii) Expenses incurred by companies for the fulfillment of any Act/ Statute of regulations
(such as Labour Laws, Land Acquisition Act etc.) would not count as CSR expenditure
under the Companies Act.
(iv) Salaries paid by the companies to regular CSR staff as well as to volunteers of the
companies (in proportion to company's time/hours spent specifically on CSR) can be
factored into CSR project cost as part of the CSR expenditure.
(v) "Any financial year" referred under Sub-Section (1) of Section 135 of the Act read with
Rule 3(2) of Companies CSR Rule, 2014, implies `any of the three preceding financial
(vi) Expenditure incurred by Foreign Holding Company for CSR activities in India will
qualify as CSR spend of the Indian subsidiary if, the CSR expenditures are routed
through Indian subsidiaries and if the Indian subsidiary is required to do so as per
section 135 of the Act.
(vii) `Registered Trust' (as referred in Rule 4(2) of the Companies CSR Rules, 2014) would
include Trusts registered under Income Tax Act 1956, for those States where
registration of Trust is not mandatory.
(viii) Contribution to Corpus of a Trust/ society/ section 8 companies etc. will qualify as CSR
expenditure as long as (a) the Trust/ society/ section 8 companies etc. is created
exclusively for undertaking CSR activities or (b) where the corpus is created
exclusively for a purpose directly relatable to a subject covered in Schedule VII of the
2. This issues with the approval of Competent Authority.
Assistant Director (CSR)
Phone No. 23389622
1. PSO to Secretary
2. PPS to Additional Secretary
3. PS to DG (IICA)/JS (M) /JS(B)/JS(SP)/DII (UCN)/EA/DII(POLICY)
4. DIR (AK)/DIR (AB)/DIR(NC)/DIR(PS)
5. e-Governance Cell for uploading on website of MCA
Annexure referred to at para (i) of General Circular No. 21/2014 dated 18.06.2014
SI. Additional items requested to be included in Whether covered under Schedule VII of the
No. Schedule VII or to be clarified as already Act
being covered under Schedule VII of the Act
1. Promotion of Road Safety through CSR:
(i) (a) Promotions of Education, (a) Schedule VII (ii) under "promoting
"Educating the Masses and Promotion education".
of Road Safety awareness in all facets
of road usage,
(b) Drivers' training, (b) For drivers training etc. Schedule VII (ii)
under "vocational skills".
(c) Training to enforcement personnel, (c) It is establishment functions of
Government (cannot be covered).
(d) Safety traffic engineering and (d) Schedule VII (ii) under "promoting
awareness through print, audio and education".
visual media" should be included.
(ii) Social Business Projects : (ii) Schedule VII (i) under `promoting health care
"giving medical and Legal aid, including preventive health care.'
treatment to road accident victims"
should be included.
2. Provisions for aids and appliances to the Schedule VII (i) under `promoting health care
differently- able persons - `Request for inclusion including preventive health care.'
3. The company contemplates of setting up Item no. (ii) of Schedule VII under the head of
ARTIIC (Applied Research Training and "promoting education" and "vocational skills"
Innovation Centre) at Nasik. Centre will cover the and "rural development".
following aspects as CSR initiatives for the benefit
of the predominately rural farming community:
(a) Capacity building for farmers covering (a) "Vocational skill" livelihood enhancement
best sustainable farm management projects.
(b) Training Agriculture Labour on skill (b) "Vocational skill"
(c) Doing our own research on the field for (c) `Ecological balance', `maintaining quality of
individual crops to find out the most cost soil, air and water'.
optimum and Agri ecological
sustainable farm practices. (Applied
research) with a focus on water
(d) To do Product Life Cycle analysis from the (d) "Conservation of natural resource" and
soil conservation point of view. `maintaining quality of soil, air and water'.
4. To make "Consumer Protection Services"
eligible under CSR. (Reference received by Dr.
V.G. Patel, Chairman of Consumer Education and
(i) Providing effective consumer
grievance redressal mechanism.
(ii) Protecting consumer's health and Consumer education and awareness can be
safety, sustainable consumption,
covered under Schedule VII (ii) "promoting
consumer service, support and education".
(iii) Consumer protection activities.
(iv) Consumer Rights to be mandated.
(v) all consumer protection programs and
activities" on the same lines as Rural
Development, Education etc.
5. a) Donations to IIM [A] for conservation of
buildings and renovation of classrooms
would qualify as "promoting education" and
hence eligible for compliance of Conservation and renovation of school
companies with Corporate Social buildings and classrooms relates to CSR
Responsibility. activities under Schedule VII as "promoting
b) Donations to IIMA for conservation of
buildings and renovation of classrooms
would qualify as "protection of national
heritage, art and culture, including
restoration of buildings and sites of
historical importance" and hence eligible
for compliance of companies with CSR.
6. Non Academic Technopark TBI not located Schedule VII (ii) under "promoting education", if
within an academic Institution but approved and approved by Department of Science and
supported by Department of Science and Technology.
7. Disaster Relief Disaster relief can cover wide range of
activities that can be appropriately shown under
various items listed in Schedule VII. For
(i) medical aid can be covered under
`promoting health care including
preventive health care.'
(ii) food supply can be covered under
eradicating hunger, poverty and
(iii) supply of clean water can be covered
under `sanitation and making
available safe drinking water'.
8. Trauma care around highways in case of road Under `health care'.
9. Clarity on "rural development projects" Any project meant for the development of rural
India will be covered under this.
10. Supplementing of Govt. schemes like mid-day Yes. Under Schedule VII, item no. (i) under
meal by corporates through additional nutrition `poverty and malnutrition'.
would qualify under Schedule VII.
11. Research and Studies in the areas specified in Yes, under the respective areas of items
Schedule VII. defined in Schedule VII. Otherwise under
12. Capacity building of government officials and No.
elected representatives both in the area of PPPs
and urban infrastructure.
13. Sustainable urban development and urban Not covered.
public transport systems
14. Enabling access to, or improving the delivery of, Can be covered under both the heads of
public health systems be considered under the "healthcare" or "measures for reducing
head "preventive healthcare" or "measures for inequalities faced by socially & economically
reducing inequalities faced by socially & backward groups", depending on the context.
economically backward groups"?
15. Likewise, could slum re-development or EWS
housing be covered under "measures for reducing Yes.
inequalities faced by socially & economically
Under `Environmental sustainability, ecological
16. Renewable energy projects balance and conservation of natural resources',
17. (i) Are the initiatives mentioned in
Schedule VII exhaustive? (i) & (ii) Schedule VII is to be liberally
interpreted so as to capture the essence of
(ii) In case a company wants to undertake subjects enumerated in the schedule.
initiatives for the beneficiaries
mentioned in Schedule VII, but the
activity is not included in Schedule VII,
then will it count (as per 2(c)(ii) of the
Final Rules, they will count)?
18. US-India Physicians Exchange Program No.
broadly speaking, this would be program that
provides for the professional exchange of
physicians between India and the United States.