CSR Applicability: Which Companies Must Spend on CSR?
The three thresholds that make CSR mandatory under Section 135 (net worth, turnover and net profit), how they apply, and common questions answered.
Not every company in India has to spend on CSR. Section 135 of the Companies Act, 2013 applies only to companies that cross specific financial thresholds. Here is how to tell whether yours does.
The three thresholds
A company is covered if, in the immediately preceding financial year, it met any one of these:
| Criterion | Threshold |
|---|---|
| Net worth | ₹500 crore or more |
| Turnover | ₹1,000 crore or more |
| Net profit | ₹5 crore or more |
Crossing even one threshold brings the company under Section 135 for the current year.
Does it apply to private and foreign companies?
Yes. The law applies to every company registered in India, whether public or private, listed or unlisted. It also applies to foreign companies with a branch or project office in India, using the figures of their Indian operations.
What if a company stops meeting the criteria?
Under the amended rules, a company that ceases to meet all three thresholds for three consecutive financial years is no longer required to comply with Section 135. Until then, the obligation continues.
What it means in practice
Once covered, a company must:
- calculate its CSR obligation (2% of average net profit; see our calculation guide);
- form a CSR Committee, unless the obligation is ₹50 lakh or less;
- adopt a CSR policy and an annual action plan;
- spend through eligible activities and implementing agencies; and
- disclose its spending in the board's report and in Form CSR-2.
A note on newly covered companies
Companies crossing the threshold for the first time often have small obligations and little in-house CSR capacity. Many choose to fund a single, well-designed programme with an experienced partner rather than spreading small amounts across many causes. This tends to produce clearer impact and simpler reporting.
If your company has just become eligible, talk to Orvys about building a focused first programme.
General information only, not legal advice.
