Corporate social responsibility (CSR) is more or less an act of a company in which it expresses its concern and commitment to society as a whole in terms of sustainability and development. CSR refers to a company’s morale and ethical behaviour toward society as a whole.

CSR is mandatory for all companies, whether public or private, and applies to every company, its holding company, its a subsidiary company, and any foreign firm, according to section 135 of the Companies Act, 2013.

CSR’s Importance

Corporate Social Responsibility Under The Companies Act

CSR demonstrates to the public that a corporation cares about the environment and society. As a result, their public image improves.

Customers and potential customers favor companies that engage in CSR activities and are more involved in developmental projects. As a result, businesses stand out from their competitors in the marketplace.

In addition, CSR efforts generate free advertising in the community.

CSR increases a company’s brand value and fosters a close relationship with its customers, who are more likely to support it.

CSR (Corporate Social Responsibility) Is A Form Of Social Responsibility

A company’s CSR responsibility extends to all levels of society. Some of them are geared toward:

  • To boost the society’s overall development
  • To contribute to the advancement of education and employment, as well as the overall social health of society
  • To reduce the amount of pollution in the area (whether air, soil, water, sound, etc. )


  • To pay the proper amount of taxes and to do it on time
  • To follow the rules and regulations set forth by the law.
  • To work with the government to achieve overall development.
  • To not take advantage of various loopholes to circumvent the law.


  • To contribute to the company’s profitability
  • Not to squander the money of shareholders
  • Not to tamper with the company’s books
  • To generate a profit at a fair rate
  • To increase the company’s goodwill and promote it.
  • To ensure that accounting rules are followed, particularly in light of the company’s expansion.


  • To create a safe working atmosphere, particularly for women.
  • To pay workers’ wages and salaries on time and without any unjustifiable deductions.
  • To provide facilities for promotion and growth.
  • Employees should be praised and rewarded for their efforts.
  • To encourage employees’ general development and advancement, as well as their personal goals.
  • To give a redress mechanism within the company for them.


  • To supply good quality products
  • To supply goods that are not harmful to society.
  • To provide after-sale services.
  • To provide a mechanism for consumer grievances
  • To adopt a fair pricing technique.
  • To not monopolize the market and provide fair competition.

Committee on Corporate Social Responsibility

If a corporation meets the requirements of Section 135 of the Companies Act, 2013, it must organize a CSR committee in order to meet its legal CSR duties.

  1. The CSR Committee Was Formed
  • A CSR Committee must have at least three directors.
  • At least one of these directors must be an outsider.
  • However, CSR committees at unlisted public companies or private companies where an independent director is not necessary can function without one.
  • CSR Committees at private firms with only two directors must have only two directors.
  • The CSR committee at a foreign firm must have at least two members. One of these individuals must be an Indian resident who is authorized to receive on behalf of the foreign corporation. The foreign corporation will nominate the other person in this case.
  1. CSR Committee’s Responsibilities

  • Create a policy to carry out CSR activities in accordance with Schedule VII of the Companies Act, 2013. Allocate and audit funds for CSR activities.
  • Oversee the implementation of the CSR initiatives for which funds have been set aside to ensure that they are not wasted.
  • Regularly analyze the company’s profits and ensure that at least 2% of it is spent on CSR efforts each year.
  • Provide an annual report on the company’s different CSR efforts.
  • Ensure that local issues and regions are prioritized, or that local people and regions are promoted.
  • Ensure that CSR policies are made public by posting them on the company’s official website in the format that the committee has approved.

Schedule VII of CSR Activities

The following are the numerous CSR activities listed in Schedule VII of the Companies Act 2013 and the Companies (Corporate Social Responsibility Policy) Rules 2014:

  • Putting an end to hunger, poverty, and malnutrition
  • Promoting preventive health care and sanitation, as well as making safe drinking water available
  • Promoting livelihood improvement projects, as well as education and job opportunities for children, women, and people with disabilities.
  • Establishing orphanages, nursing homes, daycare centers, and other facilities for senior residents to promote gender equality and women’s empowerment.
  • They are promoting policies that address the inequities that SEBCs, OBCs, SCs, and STs confront.
  • To reduce child mortality, suitable hospital facilities and medicines at a subsidized rate must be provided, as well as improvements in maternal health.
  • Providing hospital and dispensary facilities focusing on adequate sanitation to combat diseases and issues such as the human immunodeficiency virus (HIV), acquired immune deficiency syndrome (AIDS), malaria, and other ailments.
  • Ensure environmental sustainability and ecological balance through protecting flora and animals, animal welfare, agroforestry, natural resource conservation, and soil, air, and water quality.
  • Employment can help you improve your occupational skills.
  • Traditional Indian arts and handicrafts are promoted and developed.
  • Taking steps to improve the welfare of veterans of the armed forces, war widows, and their dependents.
  • Rural/nationally recognized/Olympic sports promotion training
  • Contribution to the Prime Minister’s National Relief Fund or any other Central Government fund for the development of SCs, STs, OBCs, and minorities.
  • Contributing to technology incubators within academic institutions such as universities and colleges that have been approved by the Central Government.

Noncompliance Fines And Penalties


Failure to comply with CSR spending provisions or transferring and using unspent monies from CSR funds will result in a punishment of up to Rs. 25 lakh, but not less than Rs. 50,000.

The Act also imposes penalties on corporate officers who fail to comply with the law. It specifies that any such company official will be subject to a fine of up to Rs. 5 lakh but not less than Rs. 50,000, or imprisonment for up to three years, or both.