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CSR and Social Governance · CSR Projects and Implementation Agency

Board and CSR Committee Role in CSR Project Implementation

Updated 11 October 2026 · Fact-checked

The CSR Committee formulates the CSR Policy, recommends the spend, and recommends an annual action plan. The Board approves the policy, ensures the activities are undertaken, and approves the plan. Together they set project lists, fund utilisation modalities, schedules and monitoring, and the Board reports any unspent amount with reasons.

Understand Board and CSR Committee Role in Project Implementation

A company does not just "spend 2% on CSR". Someone must decide what to do, with whom, with how much money and by when. Under section 135, that job is split between the CSR Committee and the Board.

The CSR Committee is the proposing body. Under section 135(3) it formulates and recommends the CSR Policy to the Board, recommends the amount of expenditure, and monitors the policy from time to time. Under the CSR Rules, it also recommends an annual action plan in pursuance of the policy. Treat this plan as the working document that turns policy into projects.

The Board is the deciding and accountable body. Under section 135(4) it approves the CSR Policy after taking the Committee's recommendations into account, discloses the policy contents in its report, places the policy on the company website, and ensures the activities in the policy are actually undertaken. Under section 135(5) it must ensure the company spends at least two per cent of the average net profits of the three immediately preceding financial years.

The annual action plan, as set out in the CSR Rules, normally covers: the list of projects to be undertaken from Schedule VII, the manner of execution, the modalities of fund utilisation and implementation schedules, the monitoring and reporting mechanism, and details of any need and impact assessment. The Board may alter the plan at any time during the year, on the recommendation of the Committee, if it reflects the reasons for the change. Where the amount to be spent does not exceed fifty lakh rupees, section 135(9) says no Committee is needed, and the Board discharges the Committee's functions.

Think of it as a chain: Policy, then Action Plan, then Board approval, then implementation, then monitoring, then reporting. A good answer shows who does each link and why.

Key rules to remember

CSR Committee composition
Three or more directors, at least one independent director
Section 135(1). If the company need not appoint an independent director under section 149(4), two or more directors are enough.
Committee functions
Formulate and recommend policy + recommend expenditure + monitor policy
Section 135(3). The annual action plan recommendation comes from the CSR Rules.
Board duties
Approve policy + disclose and place on website + ensure activities are undertaken
Section 135(4).
Minimum CSR spend
At least 2% × average net profit of the three immediately preceding financial years
Section 135(5). Net profit is computed under section 198, as per the Explanation.
Committee exemption
Amount to be spent ≤ ₹50,00,000 → no Committee; Board discharges its functions
Section 135(9).
Ongoing project unspent amount
Transfer to Unspent CSR Account within 30 days of financial year end; spend within 3 financial years
Section 135(6). If still unspent, transfer to a Schedule VII Fund within 30 days of the third year ending.
Unspent amount, non-ongoing
Transfer to a Schedule VII Fund within six months of the end of the financial year
Second proviso to section 135(5). The Board's report must give reasons.

How to solve Board and CSR Committee Role in Project Implementation questions

Use this order for any question on who does what in CSR project implementation. It keeps your answer in the provision, analysis, conclusion format.

  1. 1Identify the stage in the facts: policy, action plan, approval, implementation, monitoring or reporting.
  2. 2Name the responsible body for that stage: the CSR Committee proposes, recommends and monitors; the Board approves and ensures.
  3. 3State the rule with its source: section 135(3) for the Committee, section 135(4) and (5) for the Board, and the CSR Rules for the action plan.
  4. 4List the action plan contents if asked: projects from Schedule VII, manner of execution, fund utilisation modalities, implementation schedules, monitoring mechanism, impact assessment details.
  5. 5Check the company size: if the spend is up to ₹50 lakh, the Board performs the Committee's functions under section 135(9).
  6. 6Apply to the facts: what was done, what was missed, and whether the Board properly approved and monitored.
  7. 7Check the money: spent, unspent for an ongoing project, or unspent otherwise, and the transfer timelines and penalty.
  8. 8Conclude clearly, with the compliance step or drafting point the company should take.

Quickest way: Committee proposes, Board approves

When to use it: Use when time is short and the question asks who is responsible for a CSR step or what an action plan contains.

  1. Write one line: Committee recommends and monitors, Board approves and ensures.
  2. Tick the action plan items: projects, execution manner, fund modalities, schedules, monitoring, impact assessment.
  3. Add the section references: 135(3), 135(4), 135(5), 135(6), 135(9).
  4. Close with the reporting point: Board's report discloses Committee composition and reasons for any unspent amount.

Common mistakes in Board and CSR Committee Role in Project Implementation

  • Saying the Board prepares the annual action plan and the Committee approves it.

    Students reverse the roles because both bodies sound powerful.

    Fix: Remember: the Committee recommends, the Board approves. Approval always sits with the Board.

  • Listing only the project names as the contents of the action plan.

    Students think of the plan as a project list.

    Fix: Add manner of execution, fund utilisation modalities, implementation schedules, monitoring mechanism and impact assessment details.

  • Insisting on a CSR Committee for a company whose CSR spend is below ₹50 lakh.

    Students remember section 135(1) but forget section 135(9).

    Fix: Compute the required spend first. If it does not exceed ₹50 lakh, the Board discharges the Committee's functions.

  • Treating all unspent CSR money the same way.

    Students merge section 135(5) and 135(6).

    Fix: Separate ongoing projects (Unspent CSR Account, 30 days, three years) from other cases (Schedule VII Fund, six months).

  • Stating the 2% on the current year's profit.

    The word 'net profit' is read loosely.

    Fix: Use the average net profit of the three immediately preceding financial years, computed under section 198.

  • Forgetting that the Board must disclose the policy and put it on the website.

    Students focus on spending and ignore disclosure.

    Fix: Add the disclosure step from section 135(4)(a) and the reasons for unspent amounts in the Board's report.

Worked examples

Example 1

Sundaram Textiles Ltd has an average net profit of ₹40 crore over the last three years. Its CSR Committee has recommended an annual action plan listing two rural education projects. Advise the Board on its role and what the plan should contain.

Show the solution
  1. Required spend = 2% × ₹40 crore = ₹0.80 crore = ₹80 lakh.
  2. Since ₹80 lakh exceeds ₹50 lakh, the company must have a CSR Committee under section 135(1), and the section 135(9) relief does not apply.
  3. The Committee has correctly recommended the plan. The Board must now approve it after considering the recommendation, and ensure the activities are undertaken under section 135(4)(b).
  4. The plan should state the projects from Schedule VII, the manner of execution, the modalities of fund utilisation and implementation schedules, the monitoring and reporting mechanism, and details of any impact assessment.
  5. The Board should also monitor progress during the year. If the plan changes, it can alter the plan on the Committee's recommendation and record the reasons.
  6. The Board's report must disclose the Committee's composition, the policy contents, and, for any shortfall, the reasons for not spending.

Answer: The required spend is ₹80 lakh, so a CSR Committee is mandatory. The Committee recommends the plan; the Board approves it, ensures implementation and monitors it. The plan must cover projects, execution manner, fund modalities, schedules, monitoring and impact assessment.

Example 2

Kaveri Power Ltd has an average net profit of ₹20 crore. The Board approved a plan, but only ₹30 lakh was spent by year end. The remaining amount relates to a multi-year ongoing project. State the compliance consequences.

Show the solution
  1. Required spend = 2% × ₹20 crore = ₹40 lakh.
  2. Amount spent = ₹30 lakh, so ₹10 lakh is unspent.
  3. Because the required spend does not exceed ₹50 lakh, section 135(9) applies. No Committee is required, and the Board performs its functions.
  4. Since the unspent amount relates to an ongoing project, section 135(6) applies. The ₹10 lakh must be moved to the Unspent CSR Account in a scheduled bank within 30 days of the financial year end.
  5. The company must spend it within three financial years from the date of transfer. If it does not, it must transfer the balance to a Schedule VII Fund within 30 days of the third year ending.
  6. The Board's report must give reasons for the shortfall. Default under section 135(7) attracts a penalty of twice the amount required to be transferred or ₹1 crore, whichever is less, on the company, and one-tenth of that amount or ₹2 lakh, whichever is less, on each officer in default.

Answer: The shortfall is ₹10 lakh. Because it relates to an ongoing project, it goes to the Unspent CSR Account within 30 days of year end and must be spent within three financial years, failing which it goes to a Schedule VII Fund. The Board's report must give reasons, and the Board performs the Committee's functions.

Exam tips

  • Always split your answer by body: Committee actions first, Board actions second.
  • Quote section 135(3), 135(4), 135(5), 135(6) and 135(9) accurately. Examiners reward correct sub-section references.
  • Compute the 2% figure early in numerical case facts. It decides whether section 135(9) applies.
  • For action plan questions, give a complete list of contents and then link each item to project implementation.
  • End case answers with a practical drafting or compliance step, such as a Board resolution approving the plan or a record of the reasons in the Board's report.

Practice questions from CSR Projects and Implementation Agency

Board and CSR Committee Role in Project Implementation in other exams

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

Board and CSR Committee Role in Project Implementation: frequently asked questions

Who approves the CSR annual action plan?

The CSR Committee recommends the plan, and the Board approves it. The Board can also alter the plan during the year on the Committee's recommendation, recording the reasons.

What does the CSR annual action plan contain?

It lists the projects to be undertaken from Schedule VII, the manner of execution, the modalities of fund utilisation and implementation schedules, the monitoring and reporting mechanism, and details of any impact assessment.

How does the Board monitor CSR projects?

The Board ensures the policy activities are undertaken under section 135(4)(b), and the Committee monitors the policy from time to time under section 135(3)(c). The monitoring mechanism is set out in the annual action plan and reported in the Board's report.

Does every company need a CSR Committee?

No. If the amount to be spent under section 135(5) does not exceed ₹50 lakh, section 135(9) says the Committee is not required and the Board discharges its functions.

What happens to unspent CSR money?

For an ongoing project, it goes to the Unspent CSR Account within 30 days of year end and must be spent within three years. For other cases, it goes to a Schedule VII Fund within six months, and the Board's report must give reasons.