CSR and Social Governance · Corporate Social Responsibility

Eligible CSR Activities under Schedule VII

Updated 11 October 2026 · Fact-checked

Schedule VII lists the areas in which a company can spend its CSR money under section 135. These include hunger and health, education, gender equality, environment, heritage, armed forces welfare, sports, relief funds, research, rural development, slums and disaster relief. Normal business activity and political contributions do not qualify.

Understand Eligible CSR Activities under Schedule VII

Section 135 tells a covered company to spend at least two per cent of its average net profit of the three preceding financial years on CSR. It does not say what counts as CSR. Schedule VII answers that. The CSR Policy must indicate activities in the areas or subjects specified in Schedule VII (section 135(3)(a)).

Think of Schedule VII as a list of themes, not a list of fixed projects. The themes are: eradicating hunger, poverty and malnutrition, and promoting health care, sanitation and safe drinking water; education and livelihood skills; gender equality, women empowerment, old age homes and day care centres; environmental sustainability, animal welfare and conservation of natural resources; protection of national heritage, art and culture; welfare of armed forces veterans, war widows and their dependants; training for rural, national, Paralympic and Olympic sports; contributions to the Prime Minister's relief funds and similar Central Government funds; contributions to technology incubators and approved research bodies; rural development; slum area development; and disaster management.

The rules framed under section 135 and the Schedule's wording are read broadly in favour of social benefit. A project qualifies if it fits one of the themes. You do not need an exact match to a project name.

Some spending never counts, even if it looks charitable. Under the CSR Rules, the following are excluded: activities done in the normal course of business; activities that support the company's own business; activities outside India (apart from training of Indian sports personnel); one-off events such as awards, sponsorships of TV programmes or advertisements; and projects meant only for employees and their families. Contribution to a political party is also excluded. Section 182 governs political contributions, and they are a separate matter from CSR.

The Board must also give preference to the local area and areas around it where the company operates (proviso to section 135(5)). This is a preference, not a ban on spending elsewhere in India.

Key rules to remember

Minimum CSR spend: CSR spend ≥ 2% × average net profit of the 3 immediately preceding financial years; Section 135(5). Net profit is calculated as per section 198, excluding sums prescribed. If the company is under three years old, use the preceding years available.
Source of eligibility: Eligible CSR activity = activity falling in an area or subject in Schedule VII and not excluded by the CSR Rules; Both tests must be met. The policy must indicate activities in Schedule VII areas (section 135(3)(a)).
Political contribution: Political contribution under section 182 ≠ CSR expenditure; Section 182 needs a Board resolution and payment by account payee cheque, draft or electronic clearing. Contravention: company fine up to 5 × amount; officer in default up to 6 months' imprisonment and fine up to 5 × amount.
Local area preference: Preference to local area and areas around it where the company operates; Proviso to section 135(5). It is a preference, not a bar on other areas.

How to solve Eligible CSR Activities under Schedule VII questions

Use this method for any question asking whether an activity is eligible CSR spending or asking you to list Schedule VII activities.

1Read the facts and identify the activity, who benefits, and where it takes place.
2Match the activity to a Schedule VII theme, such as health, education, environment, rural development or disaster relief. Name the theme.
3Test the exclusions: is it part of normal business, does it support the company's own business, is it outside India, is it a one-off event or award, is it only for employees, is it a political contribution?
4Check the contributing route if money goes to a fund or institution. Funds and research bodies must be those named in Schedule VII.
5Check the local area preference and whether the activity is in the CSR Policy approved by the Board.
6State the conclusion clearly: eligible or not eligible, and the reason in one line.
7Add the practical point: Board approval, disclosure in the Board's report, and treatment of any unspent amount if the amount falls short.

Quickest way: Theme-then-exclusion check

When to use it: Use it for short-answer questions and for MCQ-style case parts inside a written answer, when time is short.

Write the Schedule VII theme the activity fits in five words.
Write the exclusion test in one line: business, employees only, outside India, one-off event, political party.
Give the verdict and cite section 135 or section 182 where relevant.

Common mistakes in Eligible CSR Activities under Schedule VII

Treating a political party donation as CSR because it is a social cause.
Students think any donation is a CSR activity.
Fix: Political contributions are excluded from CSR. They are governed by section 182, with its own conditions and penalty.
Counting spending that benefits only employees as CSR.
The activity looks like health or education, so the theme seems to fit.
Fix: Passing the theme test is not enough. Projects only for employees and their families are excluded. The beneficiaries must be the wider community.
Counting activities in the normal course of business, such as regular product sales or compliance spending, as CSR.
Students forget the 'not business' test.
Fix: Ask whether the company would do it anyway for profit or law. If yes, it is not CSR.
Saying CSR spending must be only in the local area.
The proviso to section 135(5) is remembered as a rule, not a preference.
Fix: The Board must give preference to the local area and areas around it. Spending elsewhere in India is not barred.
Writing the list of Schedule VII items from memory in wrong or invented detail.
Students try to recall item numbers and wording.
Fix: Group items by theme and give examples. Do not quote item numbers unless you are sure of them.

Worked examples

Example 1

Bharat Textiles Ltd, a covered company, proposes to contribute ₹50,00,000 to a registered political party and to count it as CSR spending. Advise the Board.

Show the solution

Identify the issue: whether a political party contribution can be CSR expenditure.
Rule: contribution to a political party is excluded from CSR and is governed by section 182, which has separate conditions.
Section 182 conditions: a Board resolution authorising it, payment by account payee cheque, draft or electronic clearing (or a notified scheme instrument), and disclosure in the profit and loss account. The company must also be older than three financial years and not a Government company.
Penalty on contravention: fine up to five times the amount = 5 × ₹50,00,000 = ₹2,50,00,000 on the company, and officers in default face up to six months' imprisonment and a fine up to the same limit.
Conclusion: the amount cannot count towards the two per cent CSR obligation.

Answer: The contribution is not eligible CSR spending. It falls under section 182, and the company must still spend its CSR amount on Schedule VII activities. A contravention of section 182 can attract a fine up to ₹2,50,00,000 on the company.

Example 2

Sunrise Pharma Ltd plans four items: (a) a free school-meal programme in a village near its plant, (b) sponsoring a TV award show for its brand, (c) a health camp only for its own staff, (d) a relief fund contribution to the Prime Minister's National Relief Fund. Which are eligible?

Show the solution

(a) School meals address hunger and malnutrition and support education. This fits Schedule VII. It is also near the plant, which meets the local area preference. Eligible.
(b) A TV award show for its brand is a one-off event and a business promotion. It is excluded. Not eligible.
(c) A health camp only for employees fits the health theme but benefits employees only. Excluded. Not eligible.
(d) The Prime Minister's National Relief Fund is named in Schedule VII as a permitted fund. Eligible.

Answer: Items (a) and (d) are eligible CSR activities. Items (b) and (c) are excluded because they are a one-off promotional event and an employee-only benefit.

Exam tips

Always give both tests: the Schedule VII theme and the exclusions. Marks are split between them.
For 'is political contribution allowed as CSR', answer no, then bring in section 182 with its Board resolution, payment mode and penalty.
List Schedule VII by themes with a short example each. This is safer than item numbers.
In case questions, state the Board role: the CSR Policy must be approved by the Board and the activities in it must be undertaken.
End with a clear conclusion line. Examiners look for a firm verdict after the analysis.

Practice questions from Corporate Social Responsibility

Eligible CSR Activities under Schedule VII in other exams

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

Eligible CSR Activities under Schedule VII: frequently asked questions

Is political contribution allowed as CSR?

No. A political contribution is excluded from CSR expenditure. It falls under section 182, which requires a Board resolution and payment by account payee cheque, draft or electronic clearing, and a disclosure in the profit and loss account.

What activities are not eligible as CSR expenditure?

Activities in the normal course of business, activities that support the company's own business, activities outside India (except training of Indian sports personnel), one-off events such as awards or sponsorships, projects only for employees and their families, and political contributions.

Can a company spend CSR money outside its local area?

Yes. The proviso to section 135(5) requires the company to give preference to the local area and areas around it. It does not bar spending in other places in India, if the activity is in Schedule VII.

Do I need to memorise Schedule VII item numbers?

No. Learn the themes and examples. Use item numbers only if you are certain of them. A correct theme with a clear example earns the marks.