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Corporate and Economic Laws · Corporate Governance and Social Responsibility and Sustainability

CSR Implementation, Impact Assessment and Reporting

Updated 11 October 2026 · Fact-checked

A company carries out CSR through its own staff or through eligible implementing agencies that hold a CSR registration number (Form CSR-1). The board approves an annual action plan. Large spenders must get independent impact assessments. The company then discloses its CSR activities in an annexure to the board's report and on its website.

Understand CSR Implementation, Impact Assessment and Reporting

Spending on CSR is only half the job. The law also asks how the money was routed, whether it worked, and whether you told shareholders and the regulator properly. This topic covers those three parts: implementation, impact assessment and reporting.

Implementation. The board approves an annual action plan on the CSR Committee's recommendation. The plan lists the projects, how funds will be used, the implementation schedule, the monitoring mechanism and the reporting method. The board may change the plan during the year if needed. A company can run projects itself, or through an implementing agency: a company registered as a charitable company, a registered public trust or a registered society, or a body set up by the Central or a State Government or under an Act. A company may also work with other companies, but each company reports its own share separately.

Registration of agencies. An outside entity must register with the Registrar by filing Form CSR-1 electronically. It then receives a unique CSR Registration Number. The company's CSR Committee must also check the agency's track record. The company should be able to show that the agency has experience of similar projects. The registration number is quoted in the company's CSR reporting.

Impact assessment. This is an independent check of whether a project delivered its intended results. It is mandatory only for larger companies: those with an average CSR obligation of ₹10 crore or more in the three immediately preceding financial years. It then applies to projects with an outlay of ₹1 crore or more that were completed at least one year earlier. The report is placed before the board and annexed to the board's report on CSR.

Reporting. The company files an annual CSR report in the prescribed format as an annexure to the board's report. It also puts the CSR Committee's composition, the CSR policy and the board-approved projects on its website. Details of the unspent amount, capital assets created and impact assessments must be shown. The person in charge of finance (usually the CFO) certifies that funds were used as the board approved.

Key rules to remember

Impact assessment trigger (company level)
Average CSR obligation of the 3 immediately preceding financial years ≥ ₹10 crore
Test is on the obligation, not on actual spend. Use a simple average of three years.
Impact assessment trigger (project level)
Project outlay ≥ ₹1 crore AND completed at least 1 year before
Both conditions must hold. A project still running or under a year old is not covered.
Cost of impact assessment that can be booked as CSR
Cap rule: up to the lower of 5% of total CSR expenditure for the year or ₹50 lakh
Take 5% of the year's total CSR spend, compare with ₹50 lakh, and use the lower figure as the cap.
Administrative overheads
Administrative overheads ≤ 5% of total CSR expenditure for the financial year
Applies to the company's own overheads on CSR.
Agency registration
Form CSR-1 filed electronically with the Registrar → unique CSR Registration Number
Filed by the implementing entity, not by the company.
Unspent amount, ongoing projects
Transfer to Unspent CSR Account within 30 days of financial year end; spend within 3 financial years
If still unspent after that, transfer to a Fund under Schedule VII. Other unspent amounts go to such a Fund within six months of year end.

How to solve CSR Implementation, Impact Assessment and Reporting questions

Use this order for any question on implementation, impact assessment or reporting. It keeps your answer complete and in the sequence examiners expect.

  1. 1Identify what is asked: implementation route, agency eligibility, impact assessment, or the content of the report.
  2. 2If an agency is involved, check three things: its type (charitable company, registered trust or society, or government-created body), its Form CSR-1 registration number, and its track record.
  3. 3Check whether the board approved an annual action plan on the CSR Committee's recommendation, and whether any change was approved by the board.
  4. 4For impact assessment, compute the three-year average CSR obligation. If it is ₹10 crore or more, test each project for outlay of ₹1 crore or more and completion at least a year ago.
  5. 5Compute any cost caps asked for: administrative overheads at 5%, and impact assessment cost at the lower of 5% of total spend or ₹50 lakh.
  6. 6List the reporting items: annexure to the board's report, website disclosure, unspent amount treatment, capital assets, impact assessment reports, and the CFO certification.
  7. 7State your conclusion in one line and tie it to the facts in the case.

Quickest way: Three-question check for case scenarios

When to use it: Use this for MCQs and for the first half of a case-based descriptive answer, when time is short.

  1. Who implements? If an outside entity, ask: does it have a CSR registration number from Form CSR-1?
  2. Is impact assessment due? Average obligation of three years ≥ ₹10 crore, then project outlay ≥ ₹1 crore and completed at least one year ago.
  3. Where is it reported? Annexure to board's report, plus the website, plus the unspent account rules for any shortfall.

Common mistakes in CSR Implementation, Impact Assessment and Reporting

  • Saying the company itself files Form CSR-1.

    Students link every CSR form to the company.

    Fix: Remember that the implementing entity files Form CSR-1 to get its registration number. The company checks and quotes that number.

  • Applying impact assessment to every company.

    Students remember 'impact assessment' but forget the thresholds.

    Fix: Always test the ₹10 crore average obligation first. Below that, impact assessment is not mandatory.

  • Using actual CSR spend instead of the obligation for the three-year average.

    Spend and obligation are used interchangeably in everyday talk.

    Fix: Use the obligation figures given for each of the three preceding years and take a simple average.

  • Including projects that are under one year old or below ₹1 crore outlay in impact assessment.

    Students read only one of the two conditions.

    Fix: Tick both: outlay of ₹1 crore or more and completed at least one year ago.

  • Taking the cost cap for impact assessment as the higher of 5% of spend or ₹50 lakh, or as only 5% of spend.

    Students forget the ₹50 lakh limit or mix up 'higher' and 'lower'.

    Fix: Compute both 5% of total CSR expenditure and ₹50 lakh. The cap is the lower of the two.

  • Stating that reporting is only inside the board's report.

    Students forget the website disclosure and the filing of the CSR form with the Registrar.

    Fix: Mention the annexure to the board's report, the website disclosure of committee, policy and projects, and the CSR form filed with the annual financial statements.

Worked examples

Example 1

Shreeram Textiles Ltd has a CSR obligation of ₹12 crore, ₹9 crore and ₹11 crore in the three immediately preceding financial years. In the current year its total CSR expenditure is ₹11 crore. Project A (outlay ₹1.5 crore) was completed 14 months ago. Project B (outlay ₹80 lakh) was completed 2 years ago. Project C (outlay ₹2 crore) was completed 8 months ago. (a) Is impact assessment required, and for which projects? (b) How much of the impact assessment cost can be counted as CSR expenditure this year?

Show the solution
  1. Average obligation = (12 + 9 + 11) ÷ 3 = 32 ÷ 3 = ₹10.67 crore.
  2. ₹10.67 crore is at least ₹10 crore, so the company must undertake impact assessment through an independent agency.
  3. Project A: outlay ₹1.5 crore is at least ₹1 crore, and completed 14 months ago, which is more than one year. Covered.
  4. Project B: outlay ₹80 lakh is below ₹1 crore. Not covered, even though it is old.
  5. Project C: outlay ₹2 crore qualifies, but it was completed only 8 months ago. Not covered yet.
  6. Cost cap: 5% of ₹11 crore = ₹55 lakh. Compare with ₹50 lakh. The lower is ₹50 lakh, so the cap is ₹50 lakh.

Answer: Impact assessment is mandatory because the average obligation is ₹10.67 crore. Only Project A is covered. Up to ₹50 lakh of the assessment cost can be counted as CSR expenditure this year.

Example 2

Navbharat Pharma Ltd wants to run a rural health project through 'Arogya Seva Trust', a registered public trust that has never filed Form CSR-1. The CSR Committee asks whether it can proceed and what it must report afterwards. Advise.

Show the solution
  1. A registered public trust is an eligible type of implementing entity.
  2. But an outside entity must register with the Registrar by filing Form CSR-1 electronically to obtain a CSR Registration Number. The trust has not done this, so the company should not route CSR funds through it until it does.
  3. The CSR Committee must also check the trust's track record of similar projects, and the board should approve the project in its annual action plan on the Committee's recommendation.
  4. After implementation, the company reports the project in the annual CSR report annexed to the board's report, including the implementing agency's CSR registration number, amount spent and the mode of implementation.
  5. The company also places the CSR Committee's composition, the CSR policy and the approved projects on its website. If funds remain unspent, it follows the unspent account rules, and the CFO certifies that funds were used as approved by the board.

Answer: Navbharat Pharma should wait until Arogya Seva Trust gets a CSR Registration Number through Form CSR-1, verify its track record, include the project in the board-approved action plan, and then report it in the board's report annexure and on the website.

Exam tips

  • In MCQs, the thresholds are the favourite trap: ₹10 crore average obligation over three years, ₹1 crore project outlay, one year since completion. Memorise all three together.
  • Expect case scenarios that ask whether impact assessment applies. Show the average calculation first, then test each project.
  • When asked who files Form CSR-1, answer the implementing entity and mention the CSR Registration Number it receives.
  • In descriptive answers, structure the reporting part under four headings: board's report annexure, website disclosure, unspent amount treatment and certification. This earns marks for completeness.
  • Do not quote section numbers unless you are sure. Name the rule in plain words and apply it to the facts.

Practice questions from Corporate Governance and Social Responsibility and Sustainability

CSR Implementation, Impact Assessment and Reporting in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

CSR Implementation, Impact Assessment and Reporting: frequently asked questions

Who has to file Form CSR-1?

The entity that implements CSR projects for companies files Form CSR-1 electronically with the Registrar. It then receives a unique CSR Registration Number. The company should confirm this number before giving it CSR funds.

Is impact assessment compulsory for every company?

No. It is mandatory for companies whose average CSR obligation over the three immediately preceding financial years is ₹10 crore or more. Even then it applies only to projects with outlay of ₹1 crore or more that were completed at least one year ago.

Where do I report CSR activities?

The company reports them in an annual CSR report in the prescribed format, annexed to the board's report. It also discloses the CSR Committee's composition, the CSR policy and approved projects on its website. Impact assessment reports are annexed where applicable.

Can the cost of impact assessment be counted as CSR spending?

Yes, within a limit. It can be counted up to 5% of the total CSR expenditure for the year or ₹50 lakh, whichever is lower. For example, if total CSR spend is ₹11 crore, 5% is ₹55 lakh, so the cap is ₹50 lakh.