CSR compliance checklist for FY 2026–27
Who this applies to — the applicability test
Section 135 applies to every company — including holding/subsidiary companies and foreign companies with a branch or project office in India — meeting any one of these thresholds in the immediately preceding financial year:
- Net worth of ₹500 crore or more, or
- Turnover of ₹1,000 crore or more, or
- Net profit of ₹5 crore or more
Meet any one test and CSR obligations apply for the current year — a mid-sized company can trip the ₹5 crore net-profit threshold in a good year and find itself obligated even though the other two thresholds are far off.
The core obligation is to spend at least 2% of average net profits (computed under Section 198) of the three immediately preceding financial years. If the company is younger than three years, the average is taken over the shorter period since incorporation.
Why this matters for NGO readers
The applicability test tells you which donors are obligated spenders versus voluntary contributors — obligated spenders face penalties for underspending, which is useful leverage for a well-timed proposal near financial year-end.
The compliance checklist, organised by obligation
Obligations, owners, and deadlines in one working table:
| Obligation | Who is responsible | When |
|---|---|---|
| Confirm applicability (net worth / turnover / net profit) | CFO / Finance | Start of FY |
| Constitute CSR Committee (3+ directors, incl. one independent where applicable) | Board | On first becoming subject to Sec. 135; reviewed annually |
| Approve CSR policy and annual action plan (Schedule VII-aligned) | CSR Committee → Board | Start of FY |
| Compute average net profit (Section 198) and the 2% obligation | CFO with CA/CS | Before budgeting spend |
| Verify each implementing agency holds valid Form CSR-1 | CSR team | Before disbursing funds |
| Commission independent impact assessment where thresholds are met | CSR Committee | Before board report finalisation |
| Obtain CFO certification of proper utilisation | CFO | Before board report finalised |
| File CSR annexure in board's report; publish CSR details on website | Company Secretary | With annual filings |
| File Form CSR-2 with MCA | CS / CFO | After annual return filing window |
| Transfer unspent amount — ongoing project | CFO | Within 30 days of financial year end (to Unspent CSR Account) |
| Transfer unspent amount — no ongoing project | CFO | Within 6 months of financial year end (to a Schedule VII fund) |
Treat the two highlighted rows as hard deadlines — everything else can usually absorb a few weeks of delay; these two cannot.
Unspent-amount rules, explained clearly
This is where companies get burned most often: the rule branches on whether the underspend relates to an ongoing project, and the two paths carry different accounts, deadlines, and penalty exposure.
Path 1 — the shortfall relates to an ongoing project
If the unspent amount relates to a multi-year project already approved and under implementation, transfer it to a dedicated "Unspent CSR Account" within a scheduled bank, within 30 days of financial year end — not optional, no grace period.
Funds in this account must be spent on the project within three financial years of transfer. Anything still unspent after that must go onward to a Schedule VII fund within 30 days.
Path 2 — no ongoing project
If the company simply spent less than 2% with no project to justify holding funds, the unspent amount goes directly to a Schedule VII fund (e.g., the PM funds) within six months of financial year end.
Path 1 needs a separate account and multi-year tracking; Path 2 is a one-time transfer. Companies sometimes misclassify a stalled project as "ongoing" to buy time — this draws scrutiny on review.
⚠ Penalties for missing the transfer deadline
Under Section 135(7): the company is liable for twice the amount required to be transferred, or ₹1 crore, whichever is less. Every officer in default is liable for one-tenth of that, or ₹2 lakh, whichever is less.
Implementing-agency requirements — what NGOs need in place
If your organisation delivers CSR-funded programmes on behalf of a company, you are an "implementing agency" and must be registered with the MCA via Form CSR-1. Eligible entity types:
- A Section 8 company, registered public trust, or registered society — each with 12A and 80G registrations
- An entity established by the company itself, singly or jointly with other companies
- An entity established by the Central or State Government, or any statutory body
Once registered, the MCA issues a unique CSR Registration Number. Spend through a non-CSR-1 partner doesn't count toward a company's obligation, so this is one of the first things a corporate compliance team checks before signing a partnership agreement.
Practical tip for NGOs
Keep your CSR-1 number, 12A/80G certificates, and latest audited financials in one ready-to-share pack — CSR teams racing FY deadlines shortlist partners who can complete documentation fastest, especially in Q4.
Demonstrating outcomes credibly also strengthens renewal conversations. Mujanti's SROI calculator is a useful starting point where a company's obligation crosses the impact-assessment threshold discussed below.
Disclosure obligations
Compliance is not just about spending correctly — it is equally about documenting it. Under current rules, companies must:
- A detailed CSR annexure in the board's report — policy, committee composition, amount required, amount spent, reasons for shortfall
- A CFO certification confirming funds were utilised as board-approved
- CSR committee, policy, and projects published on the company website
- Form CSR-2 filed with the MCA
- Where average obligation over the preceding three years is ₹10 crore or more: an independent impact assessment for projects with outlay of ₹1 crore or more, with its cost addable to CSR expenditure subject to a capped add-back under current rules
Disclosure failures don't carry the same headline penalty as an unspent-transfer default, but they're the first thing an auditor checks.
Common compliance failures worth flagging early
⚠ Missing the 30-day Unspent CSR Account deadline
Falling right at financial year-end close, this is the single most commonly missed CSR deadline. Give it its own line on the year-end calendar, not a footnote under "CSR."
⚠ Routing funds through an unregistered implementing agency
Spend through a partner without valid CSR-1 registration doesn't count toward the obligation, however good the outcomes. Verify CSR-1 status before the first disbursement.
⚠ Treating administrative overheads loosely
Overheads are capped at 5% of total CSR expenditure under current rules. Teams sometimes fold in general overhead that pushes the total past this cap, disqualifying the excess as CSR spend.
⚠ Forgetting Form CSR-2
A separate MCA filing from the board report annexure, easy to lose track of in year one. Keep it on the same calendar as the annexure and CFO certification.
Excess CSR spend can be set off against required expenditure for up to the three immediately succeeding financial years, provided it's reported and board-approved — not automatic; it must be tracked explicitly.
Need help getting FY 2026–27 CSR compliance in order?
Mujanti helps CSR teams build compliant annual action plans, vet implementing agencies, and set up the calendar reminders that keep unspent-transfer deadlines from becoming penalty exposure.
Book a free 30-minute consultationThis checklist reflects Section 135 of the Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules as amended, current as of July 2026. CSR rules are amended frequently — always verify current thresholds, forms, and deadlines against the latest MCA notifications before acting. This article is general information for planning purposes and is not legal, tax, or compliance advice; consult your company secretary or chartered accountant for guidance specific to your company.