CSR Policy Amendment Rules 2022

Author: CS Pradeep Kumar Parakh | Date: 10-Oct-2022.     

The CSR Policy Amendment Rules, 2022 (“the Amendment Rules, 2022”) were notified by the MCA vide Notification No. G.S.R. 715(E) dated 20 September 2022 amending the the CSR Policy Rules, 2014 (“the Original Rules”) with effect from 20 September 2022. The key changes made to the respective Rules, effects thereof, are summarized below: 

 

Sr. No.	Rule No. of the Original Rules	Mode of Amendment	Topic of Amendment	Description of Amendment	Amendment relevant to
1.	Rule 3(1)	Insertion of proviso	CSR Committee	A Company shall continue to have its CSR Committee, till any amount remain unspent for Ongoing Project and are transferred to a separate Bank Account called as “The Unspent Corporate Social Responsibility Account” which are spent by the Company as per its obligation towards CSR within a period of three financial years from the date of such transfer of funds in the aforementioned Bank Account.	Contributor (Company)
2.	Rule 3(2)	Deleted	CSR Committee	A Company do not require to have a CSR Committee, if in the previous financial year the Company does not cross the threshold criteria for the applicability of CSR, that is Net Worth of Rs.500 Crore, Turnover of Rs.1000 Crore and Net profit of Rs. 5 Crores. Also it does not require to comply with the provisions related to CSR provisions.	Contributor (Company)
3.	Rule 4(1) & Form CSR-1	Substituted	Eligibility criteria for a NGO to become an Implementing Agency	In addition to the mandatory criteria of approval under section 80G of the Income Tax Act, 1961 and registration under section 12A of the Income Tax Act, 1961 for NGOs (a Section 8 Company or Registered Society or Registered Public Trust), NGOs having approval under Section 80G and registration under section 10(23C) of the Income Tax Act are now also eligible to undertake CSR activities as Implementing Agency for a company. The criteria of having three years track record in undertaking similar activities rain unchanged. For NGOs established by the company itself, there is no requirement to have three years track record in undertaking similar activities.   In Form CSR-1 to be filed by the implementing agency, three new options have been inserted mentioning, Section 8 Co, Registered Public Trust and Registered Society, having registration under Section 10(23C) of the Income Tax Act and approved under Section 80G of the Income Tax Act, 1961.	Implementer (NGO)
4.	Rule 4(1)(c)	Explanation added under the Rule	Explanation for term “entity”	Explanation added stating that the term “entity” mentioned under Rule 4(1)(c), shall mean a statutory body constituted under an Act of Parliament or State legislature to undertake activities covered in Schedule VII of the Act.	Statutory bodies constituted to undertake CSR activities
5.	Rule 8(3)	Amended	Relaxation for cap on Impact Assessment expenses to be booked as CSR expenses	The monetary limit of Rs.50 lakhs to book expenses incurred on Impact Assessment as CSR expenses by a company for that financial year has been relaxed. It now stands at a sum not exceeding 2% of the total CSR expenditure for that financial year or Rs.50 Lakhs, whichever is higher. The earlier limit was 5% or Rs.50 lakhs whichever is lower.	Contributor (Company)
6.	Annexure-II	Substituted	New format for Annual Report on CSR activities to be included in the Board’s Report	Annexure II of the Original Rules, prescribing the format for Annual Report on CSR activities has been substituted with a new format which is the “FORMAT FOR THE ANNUAL REPORT ON CSR ACTIVITIES TO BE INCLUDED IN THE BOARD’S REPORT FOR FINANCIAL YEAR COMMENCING ON OR AFTER THE 1ST DAY OF APRIL, 2020”.   The revised Annexure II will be part of Form AOC-4. The key changes in Annexure II are as under:   (a) Instead of attaching Impact Assessment Report, now the Company to provide an executive summary along with the Weblink of Impact Assessment    (b) Details of Average Net Profit, 2% as CSR, surplus add set off, etc were shifted from Sr No. 6 and 7 to Sr no. 5.   (c) No bifurcation on the amount spent on Ongoing and Other than Ongoing Projects is required to be given for the FY and for the preceding FY. Instead of that just to mention the total amount spent on CSR Projects during the FY   (d) New table inserted giving details on the amount spent during the FY, the amount transferred to Unspent CSR Account in 30 days and the amount transferred to any Fund mentioned under Schedule VII in 6 months    (e) New table inserted giving details of Capital Assets created or acquired through CSR amount spent in the FY and giving details of Particulars of property, address, location wit Pin code, date of creation, amount spent and details of Registered Owner.	Contributor (Company)