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

Aarav Motors Ltd's CSR Committee recommends a policy covering a multi-year rural water project. At year end Rs 30 lakh of the obligation remains unspent solely because the ongoing project, meeting the prescribed conditions, is incomplete. By when must it be moved to the Unspent CSR Account, and within what period must it be spent thereafter?

The unspent amount relating to an ongoing project must be transferred to the Unspent CSR Account in a scheduled bank within thirty days from the end of the financial year. It must then be spent within three financial years of transfer, failing which it goes to a Schedule VII Fund.

  1. AWithin six months of year end to a Schedule VII Fund; no further spending period
  2. BWithin thirty days from the end of the financial year to the Unspent CSR Account; spent within three financial years from transferCorrect
  3. CWithin thirty days of the AGM to the Unspent CSR Account; spent within one year
  4. DWithin ninety days to any bank account; spent within five years

Explanation

Section 135(6) requires transfer within thirty days from the end of the financial year to a special Unspent CSR Account in a scheduled bank, to be spent within three financial years from the transfer, failing which it goes to a Schedule VII Fund within thirty days of completing the third year. The six-month Fund route applies to unspent amounts not relating to ongoing projects.

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