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

Kaveri Textiles Ltd. (net profit above Rs 5 crore) spent less than its required CSR amount for FY 2025-26. The shortfall does not relate to any ongoing project. Under Section 135, what must the Board do?

The Board must give reasons for the shortfall in its report and, because the project is not ongoing, transfer the unspent amount to a Schedule VII Fund within six months of the financial year end. The thirty-day Unspent CSR Account route applies only to ongoing projects.

  1. ASpecify the reasons in the Board's report and transfer the unspent amount to a Schedule VII Fund within six months of the end of the financial yearCorrect
  2. BTransfer the unspent amount to the Unspent CSR Account within thirty days and spend it over three years
  3. CCarry the shortfall forward to the next year without any disclosure
  4. DDisclose the reasons only on the company's website and take no transfer action

Explanation

Under the second proviso to s.135(5), if the company fails to spend, the Board must specify reasons in its report under s.134(3)(o) and, unless the amount relates to an ongoing project, transfer it to a Schedule VII Fund within six months of the end of the financial year. The Unspent CSR Account route applies only to ongoing projects.

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