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Environmental, Social and Governance (ESG) - Principles and Practice · Corporate Social Responsibility (CSR)

CSR Reporting, Impact Assessment and Disclosure

Updated 11 October 2026 · Fact-checked

CSR reporting means disclosing your CSR policy and spending in the Board's report through an annual CSR report, and publishing key CSR details on the website. Companies with an average CSR obligation of ₹10 crore or more must also commission impact assessments of projects costing ₹1 crore or more. CSR details are also filed with the Registrar in Form CSR-2.

Understand CSR Reporting, Impact Assessment and Disclosure

CSR spending only earns trust if it is reported. The law asks three things of the company: tell the shareholders, tell the public, and tell the Registrar. Each has its own document.

Tell the shareholders. The Board's report attached to the financial statements must include details of the policy developed and implemented on corporate social responsibility initiatives taken during the year (Section 134(3)(o)). The detailed annual report on CSR, in the format given in the CSR Rules, is annexed to the Board's report. It covers the CSR policy outline, committee composition, projects, amount spent and any unspent amount with reasons.

Tell the public. The company puts the composition of the CSR Committee, the CSR Policy and the CSR projects approved by the Board on its website. The second proviso to Section 134(3) helps here. Where the policy is on the website, the Board's report may state its salient features and changes in brief and give the web address where the full policy is available.

Prove the result. Larger spenders must test whether projects actually worked. A company with an average CSR obligation of ₹10 crore or more in the three immediately preceding financial years must undertake an impact assessment, through an independent agency, of projects with an outlay of ₹1 crore or more that have been completed at least one year before the assessment. The report is placed before the Board and annexed to the annual report on CSR. The company may book impact assessment expenditure as CSR spending, up to the higher of 5% of the total CSR expenditure for the year or ₹50 lakh.

Tell the Registrar. CSR details are reported in Form CSR-2, filed as an addendum to the financial statements filing (Form AOC-4). It reports project-wise and sector-wise CSR data. The Board's report must be signed by the authorised chairperson or by two directors, one being the managing director, or by the sole director where there is one (Section 134(6)). Default in complying with Section 134 attracts a penalty of ₹3,00,000 on the company and ₹50,000 on every officer in default (Section 134(8)).

Key rules to remember

Impact assessment applicability (company test)
Average CSR obligation of the 3 immediately preceding financial years ≥ ₹10 crore
Average of the obligation, not of actual spending. Below this level, impact assessment is not mandatory.
Impact assessment applicability (project test)
Project outlay ≥ ₹1 crore AND project completed at least 1 year before the assessment
Both conditions must be met. Ongoing projects do not qualify.
Cost cap for impact assessment
Maximum bookable = higher of (5% × total CSR expenditure for the year) or ₹50 lakh
Only this amount can be counted as CSR expenditure. Any excess is a normal business cost.
Board's report content on CSR
Section 134(3)(o): details of the CSR policy developed and implemented, and initiatives taken during the year
The second proviso allows salient features plus the web address where the policy is on the website.
Signing of Board's report
Authorised chairperson, OR at least two directors (one being MD), OR the sole director
Section 134(6).
Penalty for default under Section 134
Company ₹3,00,000; each officer in default ₹50,000
Section 134(8).

How to solve CSR Reporting, Impact Assessment and Disclosure questions

Most questions give a fact situation and ask what must be reported, assessed or disclosed. Use this order and write it in provision, analysis, conclusion form.

  1. 1Identify what the question tests: Board's report content, impact assessment, website disclosure, or filing.
  2. 2State the rule in plain words, with the Section 134 reference where it applies.
  3. 3For impact assessment, calculate the average CSR obligation of the last three years and compare it with ₹10 crore.
  4. 4Test each project: outlay of ₹1 crore or more, and completed at least one year earlier. Both conditions are needed.
  5. 5Compute the cost cap: 5% of the year's total CSR expenditure against ₹50 lakh, whichever is higher.
  6. 6List where each item goes: annual CSR report annexed to the Board's report, website, or Form CSR-2.
  7. 7Check signing and penalty points if the facts show a default.
  8. 8Conclude clearly in one or two sentences and add a practical compliance point.

Quickest way: Three-box check: Board, Website, Registrar

When to use it: Use when a question asks what a company must disclose about CSR and you have little time.

  1. Box 1 (Board's report): CSR policy details, annual CSR report annexure, impact assessment report if applicable.
  2. Box 2 (Website): CSR Committee composition, CSR Policy, Board-approved projects.
  3. Box 3 (Registrar): Form CSR-2 along with the financial statements filing.
  4. For impact assessment, run the two tests: ₹10 crore average obligation, then ₹1 crore and one-year project test.
  5. Close with the penalty and signing rule if default is hinted.

Common mistakes in CSR Reporting, Impact Assessment and Disclosure

  • Using the average CSR spending instead of the average CSR obligation for the ₹10 crore test.

    Students mix up what the company was required to spend with what it actually spent.

    Fix: Always read the figures as obligation (the 2% amount) of the three immediately preceding financial years.

  • Applying impact assessment to every project of a qualifying company.

    The company-level test is remembered but the project-level test is skipped.

    Fix: Apply both: outlay of ₹1 crore or more and completion at least one year before the assessment.

  • Counting the whole impact assessment fee as CSR spending.

    Students forget the cap on this expense.

    Fix: Book only up to the higher of 5% of the year's total CSR expenditure or ₹50 lakh.

  • Saying the full CSR policy must be reproduced in the Board's report even when it is on the website.

    The second proviso to Section 134(3) is overlooked.

    Fix: State that salient features, changes and the web address are sufficient where the policy is on the website.

  • Treating Form CSR-2 as part of the Board's report.

    Both deal with CSR reporting, so they get merged in memory.

    Fix: Remember: the annual CSR report is annexed to the Board's report; CSR-2 is a separate filing with the Registrar.

  • Ignoring signing and penalty rules in a default case.

    Students answer only on CSR content.

    Fix: Add Section 134(6) on signatories and Section 134(8) penalty of ₹3,00,000 and ₹50,000 when facts show non-compliance.

Worked examples

Example 1

Sunrise Textiles Ltd had a CSR obligation of ₹12 crore, ₹9 crore and ₹11 crore in the three immediately preceding financial years. In the current year it spent ₹11 crore on CSR. Project A (outlay ₹1.5 crore) was completed 14 months ago. Project B (outlay ₹2 crore) was completed 8 months ago. Project C (outlay ₹80 lakh) was completed 2 years ago. Advise on impact assessment and the amount that can be booked for it.

Show the solution
  1. Average obligation = (12 + 9 + 11) ÷ 3 = 32 ÷ 3 = ₹10.67 crore approximately.
  2. ₹10.67 crore is at least ₹10 crore, so the company must undertake impact assessment.
  3. Project A: outlay ₹1.5 crore is at least ₹1 crore and it was completed 14 months ago, which is over one year. It qualifies.
  4. Project B: outlay is above ₹1 crore but it was completed only 8 months ago. It does not qualify yet.
  5. Project C: completed long ago, but outlay ₹80 lakh is below ₹1 crore. It does not qualify.
  6. Cost cap: 5% of ₹11 crore = ₹55 lakh. The alternative is ₹50 lakh. The higher is ₹55 lakh.

Answer: Impact assessment is mandatory for Project A only. Up to ₹55 lakh of impact assessment expenditure can be booked as CSR spending this year. The report must go to the Board and be annexed to the annual report on CSR.

Example 2

Meera Pharma Ltd has put its CSR Policy on its website. The Board asks the Company Secretary what must appear in the Board's report and on the website regarding CSR, and who must sign the Board's report. The company has no authorised chairperson, and it has a managing director.

Show the solution
  1. Board's report: Section 134(3)(o) requires details of the policy developed and implemented on CSR initiatives taken during the year.
  2. Since the policy is on the website, the second proviso to Section 134(3) allows the report to give the salient features and any change in brief, with the web address of the complete policy.
  3. The annual report on CSR in the prescribed format is annexed to the Board's report. Any impact assessment report, if applicable, is annexed to it.
  4. Website: the composition of the CSR Committee, the CSR Policy and the CSR projects approved by the Board must be available.
  5. Signing: the chairperson is not authorised, so under Section 134(6) the Board's report and annexures must be signed by at least two directors, one of whom is the managing director.
  6. Filing: CSR details go to the Registrar in Form CSR-2 with the financial statements filing.

Answer: The Board's report may give the salient features of the CSR policy with the web address, and must annex the annual CSR report. The website must carry the committee composition, policy and approved projects. Two directors, including the managing director, must sign. Default attracts a penalty of ₹3,00,000 on the company and ₹50,000 on each officer in default.

Exam tips

  • Write the answer as provision, analysis and conclusion. Examiners reward the application to the facts.
  • Always show the average calculation for impact assessment in figures, then state the conclusion.
  • Remember both limbs of the project test. Most lost marks come from missing the one-year completion condition.
  • Mention the second proviso to Section 134(3) whenever a question says the policy is on the website.
  • Add a practical compliance line: minute the Board's approval of the impact report and keep the website updated.

Practice questions from Corporate Social Responsibility (CSR)

CSR Reporting, Impact Assessment and Disclosure in other exams

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

CSR Reporting, Impact Assessment and Disclosure: frequently asked questions

What is the threshold for CSR impact assessment?

A company must undertake it if its average CSR obligation over the three immediately preceding financial years is ₹10 crore or more. It applies to projects with an outlay of ₹1 crore or more that were completed at least one year before the assessment.

Where is CSR reported in the Board's report?

Section 134(3)(o) requires details of the CSR policy and the initiatives taken during the year. The detailed annual report on CSR is annexed to the Board's report in the prescribed format.

What details must a company put on its website about CSR?

The composition of the CSR Committee, the CSR Policy and the CSR projects approved by the Board. If the policy is on the website, the Board's report can give only its salient features and the web address.

What is Form CSR-2?

It is the form in which a company reports its CSR details to the Registrar. It is filed as an addendum to the financial statements filing in Form AOC-4, separate from the Board's report.

What is the penalty if the Board's report does not comply with Section 134?

The company is liable to a penalty of ₹3,00,000 and every officer in default to a penalty of ₹50,000.