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Meghna Textiles Ltd, a company with a CSR obligation, has not spent its full 2% amount for the year. None of the unspent amount relates to an ongoing project. Under section 135, what must the Board do?

The Board must disclose the reasons for non-spending in its report and transfer the unspent amount to a Schedule VII Fund within six months of the financial year's end, because the amount does not relate to an ongoing project.

  1. ACarry the amount forward to the next year without any transfer
  2. BTransfer the unspent amount to a Fund specified in Schedule VII within six months of the expiry of the financial year, and state reasons in the Board's reportCorrect
  3. CTransfer the unspent amount to the Unspent CSR Account within thirty days of the year end
  4. DPay a penalty of one crore rupees and keep the amount

Explanation

Where the unspent amount does not relate to an ongoing project, the second proviso to section 135(5) requires the Board to give reasons in its report and transfer the amount to a Schedule VII Fund within six months of the financial year's expiry. The Unspent CSR Account with a thirty-day window applies only to ongoing projects, so option 3 is wrong.

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