No. 05/01/2014- CSR

Government of India

Ministry of Corporate Affairs

5

th Floor, ‘A’ Wing, 

Shastri Bhawan, Dr. R. P. Marg

New Delhi - 110 001 

Dated: 18th June, 2014

To,

All Regional Director,

All Registrar of Companies,

All Stakeholders

Subject: - Clarifications with regard to provisions of Corporate Social Responsibility under 

section 135 of the Companies Act, 2013.

Sir,

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 

Annexure.

Contd….-2-

(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 

expenditure.

(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 

years’.

(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.

Contd….-3-

(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 

Act.

2. This issues with the approval of Competent Authority.

Yours faithfully,

 Sd/-

(Seema Rath)

Assistant Director (CSR) 

Phone No. 23389622

Copy to:

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 MCAAnnexure referred to at para (i) of General Circular No. 21/2014 dated 18.06.2014

SI. 

No.

Additional items requested to be included in 

Schedule VII or to be clarified as already 

being covered under Schedule VII of the Act

Whether covered under Schedule VII of the 

Act

1. Promotion of Road Safety through CSR: 

(i) (a) Promotions of Education, 

“Educating the Masses and Promotion 

of Road Safety awareness in all facets 

of road usage,

(b) Drivers’ training,

 (c) Training to enforcement personnel,

(d) Safety traffic engineering and 

awareness through print, audio and 

visual media” should be included.

(ii) Social Business Projects :

“giving medical and Legal aid, 

treatment to road accident victims” 

should be included. 

(a) Schedule VII (ii) under “promoting 

education”.

(b) For drivers training etc. Schedule VII (ii) 

under “vocational skills”.

(c) It is establishment functions of 

Government (cannot be covered).

(d) Schedule VII (ii) under “promoting 

education”.

(ii) Schedule VII (i) under ‘promoting health care 

including preventive health care.’

2.

 

 Provisions for aids and appliances to the

differently- able persons - ‘Request for inclusion 

Schedule VII (i) under ‘promoting health care 

including preventive health care.’

3. The company contemplates of setting up 

ARTIIC (Applied Research Training and 

Innovation Centre) at Nasik. Centre will cover the 

following aspects as CSR initiatives for the benefit 

of the predominately rural farming community:

(a) Capacity building for farmers covering 

best sustainable farm management 

practices.

(b) Training Agriculture Labour on skill 

development.

Item no. (ii) of Schedule VII under the head of 

“promoting education” and “vocational skills” 

and “rural development”.

(a) “Vocational skill” livelihood enhancement 

projects.

(b) “Vocational skill”(c) Doing our own research on the field for 

individual crops to find out the most cost 

optimum and Agri – ecological 

sustainable farm practices. (Applied 

research) with a focus on water 

management.

(d) To do Product Life Cycle analysis from the 

soil conservation point of view.

(c) ‘Ecological balance’, ‘maintaining quality of 

soil, air and water’.

(d) “Conservation of natural resource” and 

‘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 

Research Centre).

(i) Providing effective consumer 

grievance redressal mechanism.

(ii) Protecting consumer’s health and 

safety, sustainable consumption, 

consumer service, support and 

complaint resolution.

(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. 

Consumer education and awareness can be 

covered under Schedule VII (ii) “promoting 

education”.

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 

companies with Corporate Social 

Responsibility.

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.

Conservation and renovation of school 

buildings and classrooms relates to CSR 

activities under Schedule VII as “promoting 

education”. 6. Non Academic Technopark TBI not located 

within an academic Institution but approved and 

supported by Department of Science and 

Technology. 

Schedule VII (ii) under “promoting education”, if 

approved 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 

example,

(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 

malnutrition.

(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 

accidents.

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 

meal by corporates through additional nutrition 

would qualify under Schedule VII.

Yes. Under Schedule VII, item no. (i) under 

‘poverty and malnutrition’.

11. Research and Studies in the areas specified in 

Schedule VII.

Yes, under the respective areas of items 

defined in Schedule VII. Otherwise under 

‘promoting education’.

12. Capacity building of government officials and 

elected representatives – both in the area of PPPs 

and urban infrastructure.

No.13. Sustainable urban development and urban 

public transport systems 

Not covered.

14. Enabling access to, or improving the delivery of, 

public health systems be considered under the 

head “preventive healthcare” or “measures for 

reducing inequalities faced by socially & 

economically backward groups”?

 Can be covered under both the heads of 

“healthcare” or “measures for reducing 

inequalities faced by socially & economically 

backward groups”, depending on the context.

15. Likewise, could slum re-development or EWS 

housing be covered under “measures for reducing 

inequalities faced by socially & economically 

backward groups”?

 Yes.

16.

Renewable energy projects 

Under ‘Environmental sustainability, ecological 

balance and conservation of natural resources’,

17.

(i) Are the initiatives mentioned in 

Schedule VII exhaustive? 

(ii) In case a company wants to undertake 

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)? 

(i) & (ii) Schedule VII is to be liberally 

interpreted so as to capture the essence of 

subjects enumerated in the schedule.

18. US-India Physicians Exchange Program –

broadly speaking, this would be program that 

provides for the professional exchange of 

physicians between India and the United States. 

 No.