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Kaveri Pharma Ltd has an ongoing CSR project in rural health care for which part of its CSR amount remains unspent at year end. Which statement correctly describes the treatment of the unspent amount under section 135?

Unspent money for an ongoing project must be moved within thirty days of year end to the Unspent CSR Account and spent within three financial years of transfer. If not spent, it goes to a Schedule VII Fund. The six-month Fund transfer applies to non-ongoing projects.

  1. AIt must be transferred within thirty days of year end to the Unspent Corporate Social Responsibility Account and spent within three financial years of transferCorrect
  2. BIt lapses automatically at year end with no further obligation
  3. CIt must be transferred to a Schedule VII Fund within six months in every case
  4. DIt may be carried forward in the company's general reserves indefinitely

Explanation

Under section 135(6), unspent amount pertaining to an ongoing project goes to the Unspent CSR Account within thirty days from the end of the financial year and is to be spent within three financial years from transfer, failing which it goes to a Schedule VII Fund. The six-month Fund transfer applies to unspent amounts not relating to ongoing projects.

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