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As per Section 135 of the Companies Act, 2013, certain eligible companies are required to comply with Corporate Social Responsibility (CSR) by spending 2% of their average net annual profits from the three preceding financial years on CSR projects in India. Companies fulfilling the conditions of having a net worth of Rs. 500 crores or more, turnover of Rs. 1000 crores or more, or net profit of Rs. 5 crores or more in the immediately preceding financial year are obligated to fulfill CSR obligations.
CSR funds can be utilized by companies for their own CSR activities or can be granted to Non-Governmental Organizations (NGOs) to carry out CSR activities on their behalf. NGOs that wish to undertake CSR activities on behalf of companies are required to obtain registration as “Bodies undertaking CSR activities” with the Registrar of Companies (ROC). This regulation for CSR registration for NGOs was introduced on April 1, 2021. To register, eligible NGOs need to file a CSR-1 Application with the ROC.
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