Form CSR-2: Report on Corporate Social Responsibility

Which companies file CSR-2

Section 135(1) applies to every company that, during the immediately preceding financial year, had net worth of ₹500 crore or more, or turnover of ₹1,000 crore or more, or net profit of ₹5 crore or more. Such a company must spend at least 2% of its average net profits of the three immediately preceding financial years on CSR activities listed in Schedule VII.

Every company covered by Section 135(1) files CSR-2, including those whose computed obligation was nil, for example because average net profit over three years was negative, so that the record is complete. A company whose CSR obligation is up to ₹50 lakh need not constitute a CSR committee, but still reports.

Due date and filing history

Rule 12(1B) of the Companies (Accounts) Rules, 2014 requires CSR-2 to be furnished as an addendum to AOC-4, AOC-4 XBRL or AOC-4 NBFC (Ind AS). For the first few years after the form was introduced, MCA allowed separate filing with specific deadlines.

No separate date has been notified for FY 2024-25 or later years in the rule text we reviewed, so the form follows the main rule and is filed with the AOC-4 for the year. Check the portal for any later notification.

What CSR-2 reports

The form goes into more detail than the CSR annexure in the board's report. It captures the CSR obligation, amount spent on ongoing and other projects, implementing agencies with their CSR-1 registration numbers, administrative overheads, set-off of excess spending from earlier years, impact assessment where applicable, and unspent amounts.

• Average net profit and 2% obligation
• Amount spent, project-wise and by Schedule VII category
• Implementing agency details and CSR-1 registration
• Amount transferred to Unspent CSR Account or Schedule VII fund
• Impact assessment details where required

Unspent amounts and penalties

Unspent amounts relating to ongoing projects must be moved to a special Unspent CSR Account within 30 days of the end of the financial year and spent within three years. Other unspent amounts go to a Schedule VII fund within six months of the year-end.

Section 135(7) penalises non-compliance with these transfer rules. The company is liable to twice the amount required to be transferred or ₹1 crore, whichever is less, and each officer in default to one-tenth of that amount or ₹2 lakh, whichever is less.

Common mistakes

Companies with an average CSR obligation of ₹10 crore or more over the three preceding years must carry out impact assessment, through an independent agency, of projects with outlays of ₹1 crore or more that have been completed at least one year earlier. The results are reported in CSR-2 and the board's report.

Errors include computing average net profit using the wrong section 198 adjustments, missing CSR-1 numbers of implementing agencies, mismatches between CSR-2 and the board's report annexure, and treating unspent amounts incorrectly. Because CSR-2 sits with AOC-4, delays in finalising CSR data can hold up financial statement filing. Refogo's partner professionals can prepare CSR-2 as part of annual ROC compliance for a fixed fee.

Step by step

1. 1Test applicability

   Check net worth, turnover and net profit for the preceding year.

2. 2Compute obligation

   Calculate 2% of average net profits of three preceding years.

3. 3Reconcile spending

   Match project spends, overheads and unspent transfers to the books.

4. 4Fill CSR-2

   Enter details on V3 as an addendum to the year's AOC-4.

5. 5Sign and file

   An authorised director signs and the form is submitted with AOC-4.