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

Tarang Power Ltd, covered by Section 135, had a CSR obligation of Rs 2 crore for the year. It spent Rs 1.2 crore on completed projects and left Rs 0.8 crore unspent, none relating to an ongoing project. Which consequence follows under the Act?

The Board must state the reasons for non-spending in its report and transfer the unspent Rs 0.8 crore to a Fund specified in Schedule VII within six months of the financial year end, because it does not relate to an ongoing project.

  1. AThe amount is carried forward automatically with no further action
  2. BThe Board must give reasons in its report and transfer the unspent amount to a Fund specified in Schedule VII within six months of the expiry of the financial yearCorrect
  3. CThe Board must transfer the amount to an Unspent CSR Account within thirty days
  4. DThe company is disqualified from appointing directors

Explanation

For unspent amounts not relating to an ongoing project, the Board must specify reasons in its report and transfer the amount to a Schedule VII Fund within six months of the end of the financial year. The thirty-day Unspent CSR Account route applies only to ongoing projects. Automatic carry-forward is not provided.

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