## Central Government Directions & Exemption from CSR Committee

### A) Central Government Powers

The Central Government may issue general or special directions to a company or class of companies as it considers necessary to ensure compliance with Section 135.

### B) Exemption from CSR Committee (₹50 Lakh Threshold)

Where the amount required to be spent by a company does not exceed ₹50 lakh, the company is NOT required to constitute a CSR Committee.
In such cases, the functions of the CSR Committee are discharged by the Board of Directors itself.

### C) Capacity Building Cap (5%)

Companies may build CSR capacities of:
their own personnel, AND
those of implementing agencies, through institutions having an established track record of at least 3 financial years.
However, such expenditure (including administrative overheads) shall NOT exceed 5% of total CSR expenditure of the company in one financial year.

Worked example

### Example 1

Example (Exemption): ABC Ltd. has a CSR spending obligation of ₹35 lakh for FY 2024-25. Since it is below the ₹50 lakh threshold, ABC Ltd. need not constitute a CSR Committee. The Board will directly discharge the Committee's functions.

### Example 2

Example (5% Cap): DEF Ltd. has total CSR expenditure of ₹2 crore. The maximum it can spend on capacity building + administrative overheads = 5% × ₹2 crore = ₹10 lakh.

⚠️ Common exam mistakes

Believing the ₹50 lakh exemption removes the CSR spending obligation — it only removes the Committee requirement.
Confusing the 5% cap as 5% of net profits instead of 5% of total CSR expenditure.
Forgetting that the institution providing capacity-building training must itself have a 3-year track record.

Bare-Act text Section 135(8) and 135(9) · Companies Act, 2013 · click to expand

The Central Government may give such general or special directions to a company or class of companies as it considers necessary to ensure compliance of provisions of this section and such company or class of companies shall comply with such directions. Where the amount to be spent by a company under sub-section (5) does not exceed fifty lakh rupees, the requirement under sub-section (1) for constitution of the Corporate Social Responsibility Committee shall not be applicable and the functions of such Committee provided under this section shall, in such cases, be discharged by the Board of Directors of such company.

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CSR – Central Government Directions & Exemption from CSR Committee

Worked example

⚠️ Common exam mistakes