What is the Applicability of Corporate Social Responsibility

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What is the Applicability of Corporate Social Responsibility

Preface: This post was originally published in 2022 and has been updated on August  12, 2025, to provide you with the most current and accurate information.

CSR is a self built and self regulating mechanism where a business is supposed to ensure its compliance with law, international law and ethical standards of business. The concept of CSR is mentioned in the Companies act of 2013. Section 135 of Companies Act of 2013 contains provisions which deal with the working of corporate social responsibility. 

The companies which have a net worth of 500 crore or more, turnover of 1000 crore or more or a net profit of 5 crore or more are in a situation for applicability of CSR law.

CSR Committee

A CSR committee, as mandated by the Companies Act of 2013, is required to have a minimum of three directors, out of which at least one director must be an independent director. Even if some companies are not legally obligated to appoint independent directors under other regulations, they must still include at least one independent director on their CSR committee to ensure compliance with the CSR requirements.

Functions of a CSR Committee

The CSR committee has various privileges but at the same time they have some functions to fulfill.

• Monitor a company's corporate social responsibility policy from time to time.

• Preparing a transparent working mechanism for ensuring the implementation of various activities and programs to be undertaken by the company.

• Formulate and suggest a CSR policy for the board which would indicate the activities to be undertaken by the companies under schedule VII of the act.

CSR activities require some expenditure to be done for carrying its functions. Certain activities are mentioned under the Schedule VII of the act.

• Promoting education and skilled education among the children, youngsters and even elders. Education is promoted for handicapped and special people to earn their means of livelihood.

• Rural development programs

• Slum area development programs

• Benefits for armed forces veterans, war widows and their families.

• Eradicating poverty, hunger and malnutrition and promotion of better standards of living through better sanitation and health.

• Women empowerment and promotion of gender equality.

• Protection of flora and fauna, ecological balance, environmental stability and conservation of natural resources for future generations.

• Protection of heritage of India including the ancient monuments, art and culture. Promotion and development of traditional art and handicrafts.

Other Points to Consider for CSR Policies

Along with these points there are many other things that should be considered for CSR policies.

• CSR activities happening within India only will be catered.

• Companies may collaborate and pool resources to undertake CSR activities and also share the expenditure.

• The activities which are for the welfare of the society and not only for the employees and their families will be considered as CSR activity.

• The format for annual reports of CSR activities is mentioned in the draft rules.

• The tax treatment of CSR will be in accordance with IT Act.

CSR activities are important for business operations and should be managed in compliance with the rules and regulations.

Conclusion

Corporate social responsibility is based on the Gandhian principle of Trusteeship concept. It is very important for sustainable development of stakeholders. CSR means that entrepreneurs take resources from the society and are supposed to return them back in the condition they were taken for running their businesses. If your company meets the criteria for CSR, make sure to comply with CSR regulations.

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