Corporate Social Responsibility (CSR) is a statutory obligation and a concept in India, defined as a company's commitment to contribute to social, environmental, and economic development beyond its core business operations. India became the first country globally to mandate CSR expenditure through legislation.
The legal framework is primarily established by Section 135 of the Companies Act, 2013, which became effective on April 1, 2014. While the concept has historical roots in traditional philanthropy and the trusteeship principle advocated by Mahatma Gandhi, the 2013 Act transformed it into a legal requirement to leverage corporate resources for national development and ensure corporate accountability.
The mechanism is triggered for companies with a Net worth of ₹500 crore or more, or Annual turnover of ₹1,000 crore or more, or Net profit of ₹5 crore or more during the immediately preceding financial year. Such companies must constitute a CSR Committee and, as per Section 135(5), ensure they spend at least 2% of their average net profits over the immediately preceding three financial years on CSR activities. The "Net Profit" calculation is governed by Section 198 of the Act. Permitted activities, such as promoting education and healthcare, are listed in Schedule VII.
The CSR framework connects to the Ministry of Corporate Affairs (MCA) and the Companies (Corporate Social Responsibility Policy) Rules, 2014. Entities implementing CSR projects on behalf of companies must register with the Central Government by filing Form CSR-1.
A significant recent change was the notification of the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2025, by the MCA on July 7, 2025, which came into force on July 14, 2025. This amendment substituted the existing e-form CSR-1 with a new, more detailed, web-based version, enhancing scrutiny and accountability for implementing agencies. The mandatory filing of Form CSR-1 for implementing agencies, however, was already in effect from April 1, 2021. The core mandate of spending 2% of average net profit remains unchanged.