CS Professional · CSR and Social Governance

CSR Projects and Implementation Agency: Chapter Guide

This chapter covers how a company turns its CSR Policy into action: the projects, programmes and activities it undertakes, the agencies it uses, their CSR-1 registration, the Board and CSR Committee duties, and monitoring, impact assessment and reporting. Solve questions by stating the provision, applying the facts, and concluding.

What this chapter covers

This chapter sits at the point where CSR policy becomes real spending. Section 135 of the Companies Act, 2013 requires the CSR Committee to recommend a policy and the Board to approve it and ensure that the activities in the policy are undertaken. This chapter shows how that happens: through projects, programmes and activities, directly or through implementing agencies.

You will study five linked areas. First, what counts as a project, programme or activity, and how ongoing projects differ from one-year projects. Second, routes of implementation, including the company's own team and external agencies. Third, registration of implementing agencies on Form CSR-1. Fourth, the roles of the Board and the CSR Committee. Fifth, monitoring, impact assessment and reporting.

The chapter connects to the rest of the paper in two ways. It builds on the earlier material on applicability, the CSR Committee and the two per cent spending rule. It also feeds later topics such as unspent amounts, Schedule VII areas and disclosure in the Board's report. Treat it as the practical half of CSR law.

Questions in this paper are case-based, and implementation is where facts get messy: a company routes money through a trust, an agency lacks registration, a project runs over several years, or the Board skips monitoring. You must spot the rule, apply it and conclude. This chapter rewards you because the provisions are short, the logic is consistent, and examiners can build many scenarios from them. Clear process answers, such as who approves, who monitors and what is reported, earn steady marks and also help in practical drafting questions.

CSR Projects and Implementation Agency: topics in the order to study them

1CSR Projects, Programmes and ActivitiesStart here because every later topic assumes you know what is being implemented and how ongoing projects differ from other projects.
2Implementation of CSR Policy Through AgenciesNext, learn the routes of implementation, since registration and monitoring rules depend on which route the company chooses.
3Registration of Implementing Agencies (CSR-1)Registration is the key condition for external agencies, so study it right after the routes and keep the form and its purpose clear.
4Board and CSR Committee Role in Project ImplementationOnce you know the agencies, learn who decides, approves and oversees, using sections 135(3) and 135(4).
5Monitoring, Impact Assessment and ReportingFinish with the feedback loop, since monitoring and disclosure complete the cycle and link back to unspent amounts and the Board's report.

How to prepare CSR Projects and Implementation Agency

Prepare this chapter as a process you can narrate, then practise it on facts. Keep the Act open and read the rules in its own words.

Read section 135 fully, especially sub-sections (3), (4), (5) and (6). Note who does what: the Committee formulates, recommends and monitors; the Board approves and ensures activities are undertaken.
Draw a one-page flow: policy, annual action plan, project selection, implementation route, monitoring, impact assessment, reporting. Learn it as your answer skeleton.
Learn ongoing projects against other projects. For unspent amounts, remember the 30-day transfer to the Unspent CSR Account and the three financial year window under section 135(6).
Build a short note on implementing agencies and CSR-1: who needs it and what it proves. Take exact rules, forms and timelines from the CSR Rules and ICSI material, not memory.
Practise three or four case studies. Write each in three parts: provision, application to the facts, conclusion.
Revise penalty provisions in section 135(7) and the Board's report disclosures, then test yourself by writing the chapter flow from memory.

Common mistakes in CSR Projects and Implementation Agency

Saying the Board formulates the CSR Policy.
Fix: Remember the split: the Committee formulates and recommends, the Board approves and ensures implementation.
Mixing up the two unspent-amount routes.
Fix: Ongoing project: Unspent CSR Account in 30 days, then spend in three years. Otherwise: Schedule VII Fund within six months.
Treating registration on CSR-1 as optional for external agencies.
Fix: In case answers, check whether the agency is registered and state the consequence if it is not, as per the CSR Rules.
Ignoring the ₹50 lakh rule for Committee constitution.
Fix: Check the amount to be spent first. If it does not exceed ₹50 lakh, the Board discharges the Committee's functions.
Writing generic answers without applying the facts.
Fix: Use provision, analysis, conclusion every time. Quote the figures in the question and calculate before concluding.
Miscalculating the two per cent base.
Fix: Take net profit under section 198 for the three immediately preceding years, average it, then apply two per cent.

Last-day revision: CSR Projects and Implementation Agency

Section 135(1) sets the thresholds for a CSR Committee: net worth ₹500 crore or more, turnover ₹1,000 crore or more, or net profit ₹5 crore or more in the immediately preceding financial year.
The Committee formulates the CSR Policy, recommends the expenditure amount and monitors the policy.
The Board approves the policy, discloses it in its report, places it on the website, and ensures the activities are undertaken.
Minimum spend is two per cent of average net profits of the three immediately preceding financial years.
Preference goes to the local area and areas around where the company operates.
Unspent amount for an ongoing project goes to the Unspent CSR Account within 30 days of financial year end.
Funds in the Unspent CSR Account must be spent within three financial years, failing which they go to a Schedule VII Fund within 30 days.
Unspent amount not related to an ongoing project goes to a Schedule VII Fund within six months of the financial year end.
Excess spending may be set off against future years, as prescribed.
Where the CSR amount does not exceed ₹50 lakh, no Committee is needed and the Board performs its functions.
Penalty on company: twice the amount to be transferred or ₹1 crore, whichever is less. Officer in default: one-tenth of that amount or ₹2 lakh, whichever is less.
Implementing agency registration is on Form CSR-1; confirm current details in the CSR Rules.

CSR Projects and Implementation Agency practice questions

CSR Projects and Implementation Agency in other exams

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

CSR Projects and Implementation Agency: frequently asked questions

Who is responsible for implementing CSR activities in a company?

The Board must ensure the activities in the CSR Policy are undertaken. The CSR Committee recommends the policy and the spend, and monitors the policy. Execution can be done by the company itself or through implementing agencies.

What happens to unspent CSR money on an ongoing project?

The company transfers it to the Unspent CSR Account within 30 days from the end of the financial year. It must spend it within three financial years from the transfer, failing which it moves to a Schedule VII Fund within 30 days after the third year.

Is a CSR Committee compulsory for every company covered by section 135?

No. If the amount to be spent under section 135(5) does not exceed ₹50 lakh, the Committee is not required and the Board discharges its functions.

What is the penalty for failing to transfer unspent CSR amounts?

The company is liable to a penalty of twice the amount required to be transferred or ₹1 crore, whichever is less. Each officer in default faces one-tenth of that amount or ₹2 lakh, whichever is less.