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CS Professional · CSR and Social Governance · Impact of CSR

Tara Textiles Ltd had an average net profit of Rs 80 crore in the preceding three financial years and is therefore required to spend CSR money. It completed a CSR project in FY 2024-25 with an outlay of Rs 1.5 crore, finishing the project in the same year. Under the Companies (CSR Policy) Rules, 2014, is Tara Textiles required to commission an impact assessment for this project?

Tara Textiles is not required to commission an impact assessment. The mandate applies only to companies whose average CSR obligation is Rs 10 crore or more, and to projects of Rs 1 crore or more. Tara's obligation is about Rs 1.6 crore, so it falls outside the requirement despite the project size.

  1. AYes, because every company with a CSR obligation must assess every completed project
  2. BNo, because the project outlay of Rs 1.5 crore is below the Rs 1 crore threshold only for companies with profit above Rs 100 crore
  3. CNo, because impact assessment is mandatory only for companies with average CSR obligation of Rs 10 crore or more in the preceding three years and for projects with outlay of Rs 1 crore or more, and Tara's CSR obligation is only about Rs 1.6 croreCorrect
  4. DYes, because the project outlay exceeds Rs 1 crore

Explanation

Mandatory impact assessment applies only to companies with average CSR obligation of Rs 10 crore or more in the three immediately preceding financial years, and only for projects with outlay of Rs 1 crore or more that have completed at least one year. Tara's obligation is 2% of Rs 80 crore = Rs 1.6 crore, far below Rs 10 crore. The Rs 1.5 crore outlay alone does not trigger the requirement.

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