Corporate Social Responsibility (CSR) :Development or Challenges Aryan Raj

Abstract

Corporate Social Responsibility (CSR) Policy has evolved from a charitable way to a legally  mandated part for the Companies in India. Introduction of section 135 of Companies Act ,2013  made India first country in world legally to mandate companies to spent on social, education,  rural development and in many fields. Strating with this CSR Policy it helps in transforming  the country and society towards having a sustainable growth . It also highlights that  organization is engaging in doing social and genuine work under CSR activities and which  help in building people’s trust towards companies . Moreover with the era of Internet , CSR  policy is also now aiming towards web based form and making mechanisms that not only help  government but also help the small and new Non -government originations(NGO) to have  work and contribute to the development . But there are some challenge’s now days also faced  . Lack of Mechanisms tool to regulate the implementation of activities , lack of transparency and making submission of report mandatory by CSR committee .Moreover there are many  challenges under this policy but with time and with collaboration of public and private  partnership can be resolved . It is estimated that by 2035 the CSR ecosystem expenditure may  be tripled and have more impact on the beneficiaries and the communities ¹.

Introduction

In today Corporate world a work that is Corporate social responsibility (CSR)that companies who  fulfils certain conditions under Comapanies act ,2013 have to contribute to the society and country by  doing acts that is socially economically environmentally beneficial and also helps in achieving  sustainable development along with growth . Under section 135 of Companies act ,2013 it states a  mandatory provision for Corporate Social Responsibility Committee of Board , its obligations  and contribution to be made towards CSR policy of the company and make it necessary to the Aryan Raj is a first year law student at National Forensics Sciences University Delhi .company to spend at least 2% of their average net profits ². CSR as a obligation not only  mandates a company to do acts that is beneficial for the people and country but it also helps  the company to make their operations that are safe ,ethical give positive results and alongside  building trust . As there is increase in number of startup’s or business in India ,with time these  startup’s will also have mandatory obligation of CSR policy and will become a fundamental  part of the Corporate Industry . CSR is now becoming more important or central part of the  company management may be due to rising environment and ethical problems or government  awareness and now company’s have a team of people who only look out for CSR .Meanwhile  it can also be seen that Foreign or institutional investor giving more priority to the companies  who are aligned with the policy .

Legal Framework for CSR in India

Section135 of the Companies Act ,2013³

It states to constitute a Corporate Social Responsibility Committee ( CSR Committee)  of the board and its contributions towards the policy of the company.

It also requires the companies who are qualified under CSR to contribute at least 2 %  of the average net profit of the company to CSR initiatives.

Every Companies that has :-

1. A net worth equal to or more than Rs.5000 crore or,
2. A turnover equal to or more than Rs 1000 crore or,
3. A net profit equal to or more than Rs 5 crore during any financial year Have to make CSR Committee which shall consist of:-

Three or more director’s

Among them one should be independent director .

 Functions of the committee :-

1. Discuss and Make a CSR policy for the company and activities should be mentioned in it .
2. Estimate the amount to be spent on the activities which are going to be performed. 3. Have a look and monitor the company CSR policy.

Details of the activities in which Corporate social responsibility (CSR) contributions  can be made under schedule VII of the Companies Act , 2013

1. Hunger, poverty related to health and sanitation, clean drinking water b. Promoting Education and related to employment.
2. Gender equality, women empowerment and old age homes
3. Environment balance , related to flora and fauna
4. National heritage, monuments art and culture protection
5. Contribution to Prime Minister National Relief fund

Amendment to Companies (Corporate Social Responsibility Policy) Rules, 2014

In this amendment known as The Companies (Corporate Social Responsibility Policy)  Amendment Rules, 2021 certain provisions were added that are from 1^st April 2021⁴any entity  (trust ,society , any authority) executing CSR activities must be registered by filling Form CSR 1 electronically to get a unique CSR registration number . CSR Committee must prepare a  detailed annual action plan report which should include list of approved projects (as per  Schedule VII) , Execution plan and fund expenditure. Set a limit of maximum 5% of total CSR  expenditure as administrative costs . This amendment also sets the penalty for non -compliance.  It also includes provisions for the handling of surplus , excess and unspent fund of CSR 

Amendment to Companies (CSR Policy) Rules, 2014⁵

In this amendment called Companies (Corporate Social Responsibility Policy) Amendment  Rules, 2025 ,it mandates the filling of web based Form CSR-1 for entity. It also mandates  PAN , EMAIL-OTP and Digital Signature. CSR Committee should use the updated formats as  per new requirements. There is also an extension in the submission of filling Form CSR-2 till  30 June 2025.

Judicial Interpretation

Relevant Case Laws

i)In case Charan Singh Meena vs Union of India(2018)⁶at Madhya Pradesh High Court ,  petitioner through Public Interest Litigation alleges that respondents that are Union of India , a  solar power plant under SPV Renew Solar energy Private Limited have failed to discharge their  obligation under CSR Policy.

ii) It was shown that respondents have done their activities under CSR Policy, but it was held that this work was only on papers and no work had been done or carried on the field or grassroot level . It was also alleged by the petitioner that Union of India doesn’t have provided any mechanisms or tool to check whether actual work had been done or not .It was through this  case law that amendment was done in Schedule VII of the act .

iii)The court reasoned that main goal of the CSR is not to monitor but to get a sustainable environment contributing towards development of the county . The bench also held that  contemporary legal provisions provide sufficient safeguards and told that Central Government  do not have role to play in monitoring. Court also ordered the collector of the districts of  Madhya Pradesh to take the view of the situations and if there was not activities carried on field  then it shall be informed to the Registrars of the companies for the action of the same.

iv)In case Parikh Enterprises Private Limited⁷and its two-managing director filed an  application before Registrar of companies for compounding of offence under section 134(3) of  the Companies Act , 2013. Registrar of companies forwarded the applications to the National  Company Law tribunal . The company is eligible for CSR Policy under Section 135 of  Companies act ,2013. Hence they had to carry out activities under CSR. Petitioner’s accepted  the violation of section 134 of the act . They stated that this non-compliance was without any  mala fide intention .

v)Section 441 of the Companies Act , 2013⁸provisions that governs for compounding offence  under National Company law tribunal states the punishment for the company and its officer’s or directors with fine only .Section 134(8) of the Companies Act 2013 also provides two kinds  of punishment. One for company and others for offices .The company punishment, which shall  not be less than Rs.50,000 but may be extended to Rs .25 ,00,000 . The Punishment for the  officer’s ,is imprisonment for a term which can be extended to 3 years or with fine not be less  than Rs. 50,000 or with both . In this consideration , fine of Rs. 1,00,000 for Company for  violation of Companies Act ,2013. With in three weeks form the date of the order .This tribunal  has not power to punish the officers or directors .

vi)In case if the petitioner company fails to comply with order , Registrar of Gujarat can shall  take appropriate action under law .

vii)In case Shiv Prakash Rai vs Cpio. Satluj Jal Vidyut Nigam Limited Buxar Thermal power  Porject , Hrd , Charitravan ,Buxar ,Bihar ⁹. The petitioner filled an application under Right to  Information under (RTI ,2005) before Central Information officers seeking information about  the respondent Corporate Social responsibility including details of tenders published ,  suppliers . There was no reply of RTI asked. Central Information Commission after hearing  bot sides observed that information relating to personal or third parties which has no relation  to any public interest is excluded to be disclosed under section 8(1) (j) of the RTI act .

viii)The commission directed the respondents to give the information relating to tenders ,  advisements within four weeks from the date of the order.

CSR in the age of social media

In the era of Social media , awareness about CSR becomes an in dispensable part of the  corporate world .Corporate social responsibility is not only a part of the work in company ,but  also it also adds to the corporate reputation to the company . Moreover it results in increase of  people’s trust and respect towards the company and investor priority . Social media plays an  important role about how people have view of company .It also helps in generating response  from the people that are emotionally connected to the company that are supporting activities  like environment , education , health .

Social media acts as tool for branding of company which not only boost sales but increase the  company visibility and reach towards maximum people at some time .CSR acts as theme that  connects people to company through initiatives or activities . Indian Companies that spent  CSR Expenditure on activities in Financial year 2023-24 contributed over Rs . 34,909 crore  to different sectors significantly contributing towards about . At first spent HDFC Bank  Limited spent approximately Rs. 922 crore to educational programs share of 17%.Second place  took by Reliance Industries spent approximately Rs. 899 crore¹⁰. Moreover there are many  companies , they use Corporate social responsibility to transform the country and society and  bring a sustainable change in environment also .

Challenges and Analysis

Corporate social responsibility (CSR) is a good step by corporate company to contribute towards society and country but the implementation of CSR in India is not at level and not  without criticism .There are many concerns and company lacks in implementing the activities  . Company take CSR policy as legal compulsion but not as something meaningful to do .  Central government does not have any mechanism or tool to check whether the project  submitted is implemented and people got benefitted and value with it . Moreover due to this  in CSR expenditure there can be misuse of the funds allotted to the project or can be corruption  to the grassroot level .Government doesn’t allow clear and concise guidelines about the  implementation , which results in ineffective execution of the project . Some companies allow  their near Non government organization to complete the project rather than to give to freshers  organization. Many projects of the company CSR does not help the community people nor help  in sustainable development of the county but only show it on the paper and actual work haven’t  started . Many companies often focus on completing the short term project rather than  acknowledge the result and its impact .

Comparative analysis with foreign jurisdiction

While CSR is a mandatory thing to do for the eligible companies in India , but it is also have  working in forging states .Likewise European Commission strongly promotes CSR activities for the region .In 2014 , it was ordered that companies having more than 500 employees to  submit report on the non – financial metrics .France also in 2001 ,NRE Law (Nouvelles  Regulations Economiques) was established that listing companies to give record of the social  and environmental impacts of their activities. In United Kingdom, UK Corporate Governance  Code held duties of company beyond shareholders , but it doesn’t mention directly about CSR  .In UAE , the government launched National Corporate Social Responsibility Index and Social  Responsibility Passport to ensure sustainable development and betterment of the society¹¹. In  recent years many developing countries are trying to adopt a approach likewise of CSR in  which companies contribute to the nation along with the government.

Recent Developments

In July 2025 , Ministry of Corporate Affairs implemented web based form -1 CSR to be filled  Online which helps in digitization of the process and transparency . In 2021 the government  notified certain provisions to be taken care of that Unspent CSR funds must be transferred to  a specific fund within 6 months . 

There is seen a transient shift towards the digital transformation , global warming and  developing skills in employment . The transformation of CSR towards digital phase would not  only help companies but also help the people and society to get better benefits . The Times of India reported that CSR spending in India may be triple by Financial year 2035¹² but having  an unequal distributions among the northeastern states . Leaders and NGOs remain optimistic  about the potential of CSR policy and help from Government . CSC CSR Conclave 2025¹³  leads the way forward contributing towards India growth with inclusion of rural development  education and mark of digital India . The event marks the collaboration of Public private  partnerships to create a future that is inclusive of all a sector .

Suggestions and Way Forward

There is no doubt about the Corporate social responsibility (CSR) Policy have been a wonderful  among the working of companies and made significant progress that had impacted the society  along with the nation as a whole . There can be constructive suggestions and legal reforms that  can help in making policy more concise , having transparency. The companies should sight their vision on CSR from mandatory expenditure to having impactful spent that help true  environment and social life of people . The companies should have strong relations with non  governments organization who have a strong hold on grassroots level and have well knowledge  of what communities needed the most . There should have a mechanism or process to track or  regulate the implementation of the CSR activities by the companies with metrics like number  of beneficiaries impacted . There shall be strict legal provisions and penalties for the non  compliance of CSR policy . There shall be a establishment of committee at the central level  who regulates the working of the CSR and its implementation.

Conclusion

Corporate-social-responsibility Policy has emerged as powerful mechanisms by the companies  to contribute to nation and to the communities of the society. Over the past twenty to thirty  years ,there can be seen an unstoppable support by the companies in participation of activities . However there remains some challenges around the policy which can be solved with  collaboration of the government and companies. Now ,also some companies take CSR as only  legal mandate under section 135 of Companies act , 2013 .But it should be taken as chance to make constructive and strategic progress . With CSR policy , companies also gain people trust  and long term customer and also helps in goodwill and obviously making good brand reputation and image .

At last , Corporate-social-responsibility Policy should be seen as bridge that connect  companies and people that help to grow together and policy makes should help in betterment  implementation and increase in transparency and community participation.

Reference(S):

 ¹Supriya Roy, CSR Spending in India to Triple by FY35, but inequalities remain in distribution, THE TIMES OF  INDIA(June.25,2025,22:12) CSR spending in India to triple by FY35, but inequities remain in distribution – Times  of India .

² Mayashree Aacharya , Corporate Social Responsibility Under Section 135 of Companies Act 2013,CLEAR  TAX(May. 5,2025) , Corporate Social Responsibility Under Section 135 of Companies Act 2013 .

³ Nancy Mishra , Corporate Social Responsibility Under Section 135 of Companies Act 2013, IPLEADERS(April ,8  ,2024 )CSR laws in India – Provision under the Companies Act, 2013 – iPleaders .

⁴ Ministry of Corporate Affairs ,SCHEDULE VII, notified on February ,27,2014 https://upload.indiacode.nic.in/schedulefileaid=AC_CEN_22_29_00008_201318_1517807327856&rid=79.

⁵ Ministry of Corporate Affairs ,Companies(Corporate Social Responsibility)Amendment Rules, 2025 notified on  July,07,2025 https://ca2013.com/notifications/mca-notification-regarding-companies-corporate-social responsibility-policy-amendment-rules-2015-dated-07-07-2025/ .

⁶ Charan Singh Meena vs Union of India(2018) , Madhya Pradesh High court , Charan Singh Meena v. Union Of  India | Madhya Pradesh High Court | Judgment | Law | CaseMine .

⁷ Parikh Enterprises and two managing director’s (2017) , National Company Law Tribunal ,Parikh Enterprises  Private Ltd., In Re | National Company Law Tribunal | Judgment | Law | CaseMine .

⁸ Mamta Ramaswamy ,Compounding of offences under The Companies Act ,2013 , Ipleaders ,Sept ,13 ,2016  ,https://www.indiacode.nic.in/show

data?actid=AC_CEN_22_29_00008_201318_1517807327856&sectionId=49336&sectionno=441&orderno=495 .

⁹Shiv Prakash Rai v. Cpio : Satluj Jal Vidyut niga, Limited (2019) , Central Information Commission,Shiv Prakash  Rai v. Cpio: Satluj Jal Vid… | Central Information Commission | Judgment | Law | CaseMine .

¹⁰ RP -Sanjiv Goenka Group ,India Corporates CSR spending hits RS.34,909 cr in FY24 ,FORTUNE INDIA (June  ,23 ,2025 )https://www.fortuneindia.com/business-news/indian-corporates-csr-spending-hits-record-34909-cr in-fy24-hdfc-bank-ril-tcs-lead-the-way/124305 .

¹¹ Nancy Mishra , Corporate Social Responsibility Under Section 135 of Companies Act 2013, IPLEADERS(April ,8  ,2024 )https://blog.ipleaders.in/csr-laws-india/ .

12.Supriya Roy, CSR Spending in India to Triple by FY35, but inequalities remain in distribution, THE TIMES OF  INDIA(June.25,2025,22:12) ,https://timesofindia.indiatimes.com/business/india-business/csr-spending-in india-to-triple-by-fy35-but-inequities-remain-in-distribution/articleshow/122074698.cms .

¹³ Ministry of Electronics &IT , (Release ID: 2126412) ,PIB GOV, Empowering Bharat: CSC CSR conclave 2025  champions tech-driven rural transformation through CSR, (May ,03 ,2025 , 11 :46) https://www.pib.gov.in/PressReleasePage.aspx?PRID=2126412 .