CSR, Stakeholder Engagement and ESG Investing — Practice

Question 1

State the three thresholds under Section 135(1), any one of which triggers CSR applicability.

Accepted Answer

Net worth of Rs. 500 crore or more, turnover of Rs. 1,000 crore or more, or net profit of Rs. 5 crore or more.

Question 2

What percentage of average net profit must a qualifying company spend on CSR?

Accepted Answer

At least 2% of its average net profit of the preceding three financial years.

Question 3

From which financial year is BRSR mandatory for the top 1,000 listed companies by market capitalisation?

Accepted Answer

FY 2022-23.

Question 4

Is the Rs. 10 crore CSR net-profit threshold reported in the news currently in force? Explain the correct current position.

Accepted Answer

No — it is only a proposal under the Corporate Laws (Amendment) Bill, 2026, which had not been enacted as of this content's most recent review. The current, legally applicable net-profit threshold remains Rs. 5 crore, and this should be stated as the operative figure with the proposal mentioned only as pending.

Question 5

A company has Rs. 20 lakh of unspent CSR money that does not relate to any ongoing project. State the applicable transfer destination and timeline.

Accepted Answer

Transfer directly to a specified Schedule VII fund (such as PM CARES) within 6 months of financial-year-end.

Question 6

State the Section 135(9) exception and its ongoing-project carve-out.

Accepted Answer

Where a company's CSR spending obligation does not exceed Rs. 50 lakh, it is not required to constitute a separate CSR Committee, and the board directly discharges the committee's functions. This exception does not apply, however, if the company has unspent CSR money in its Unspent CSR Account for an ongoing project, regardless of the size of its current obligation.

Question 7

A company has Rs. 15 lakh of unspent CSR money relating to an ongoing project, transferred to its Unspent CSR Account on 25 April 2024. Explain what must happen to this money, and by when, if it remains unspent as the 3-year deadline approaches.

Accepted Answer

The Rs. 15 lakh must be spent on the ongoing project within 3 financial years of the 25 April 2024 transfer date. If it remains unspent at the end of that 3-year period, it must then be transferred to a specified Schedule VII fund within a further 30 days of the 3-year period's completion — a company that misses this applicable timeline attracts a penalty of the lower of twice the shortfall amount or 10% of the amount required to be transferred.

Question 8

Explain the difference between the general BRSR requirement and the BRSR Core assurance requirement, including their respective current coverage as of FY 2026-27.

Accepted Answer

The general BRSR requirement mandates reporting across 9 NGRBC principles and roughly 140 data points for the top 1,000 listed companies by market capitalisation, applicable since FY 2022-23, and is voluntary for other listed companies. BRSR Core is a narrower, separately phased assurance requirement covering a defined set of BRSR's key performance indicators, with coverage widening by market-capitalisation rank over time — reaching the top 150 (FY 2023-24), top 250 (FY 2024-25), top 500 (FY 2025-26), and finally the top 1,000 (FY 2026-27), meaning as of the current financial year the full top-1,000 tier is subject to the assurance requirement, not merely the broader reporting requirement.

Practice — CSR, Stakeholder Engagement and ESG Investing

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