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CS Professional · CSR and Social Governance · Corporate Social Responsibility

Sagar Steels Ltd had a CSR obligation of Rs 3 crore for 2025-26 but spent Rs 3.6 crore. In the next year it wants to use the excess. Which statement matches section 135(5)?

The company may set off the Rs 60 lakh excess against its CSR spending requirement for succeeding financial years, for such number of years and in such manner as prescribed. The set-off is allowed by the third proviso to section 135(5).

  1. AThe company may set off the excess against the spending requirement for such succeeding years and in such manner as prescribedCorrect
  2. BThe excess must be refunded to the company's shareholders
  3. CThe excess is automatically carried forward for exactly one year with no conditions
  4. DThe excess can be set off only against the penalty under section 135(7)

Explanation

The third proviso to section 135(5) allows set-off of excess spending against the requirement for such number of succeeding financial years and in such manner as may be prescribed. The option of an automatic one-year carry forward ignores the prescribed manner. Set-off against penalty has no basis in the section.

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