CSR Reporting and Impact Assessment (Rule 8 of CSR Rules)

# CSR Reporting (Rule 8 of Companies (CSR Policy) Rules, 2014)

## 1. Annual Report on CSR in Board's Report

• Indian Companies: The Board's Report of every company covered under CSR rules must include an annual report on CSR containing prescribed particulars.
• Foreign Companies: The balance sheet filed under Section 381 must contain an annual report on CSR with prescribed particulars.

## 2. Impact Assessment Requirement

### Who must undertake impact assessment?

• Every company having average CSR obligation of ≥ ₹10 crore in the 3 immediately preceding financial years.

### Which projects need impact assessment?

• CSR projects with outlays of ≥ ₹1 crore, AND
• Which have been completed at least 1 year before undertaking the impact study.

### How is it conducted?

• Through an independent agency.
• Impact assessment reports are placed before the Board and annexed to the annual report on CSR.

### Booking of Expenditure

A company undertaking impact assessment may book the expenditure as CSR for that financial year, up to:

• 2% of the total CSR expenditure for that financial year, OR
• ₹50 lakh — whichever is higher.

## 3. Mandatory Website Disclosure

The Board of Directors must mandatorily disclose on the company's website (if any), for public access:

• Composition of the CSR Committee
• CSR Policy
• Projects approved by the Board

## 4. Special CSR Activities (Clarifications via MCA Circulars)

### General Circular 10/2020 & related (COVID-19):

• Spending of CSR funds for COVID-19 is an eligible CSR activity.
• Setting up makeshift hospitals, temporary COVID care facilities, and provision of equipment fall under:
• Item (i) of Schedule VII — promotion of healthcare (including preventive health care)
• Item (xii) of Schedule VII — disaster management

### General Circular 13/2021 (30 July 2021):

• Spending of CSR funds on COVID-19 vaccination for persons OTHER THAN employees and their families is an eligible CSR activity under items (i) and (xii) of Schedule VII.

### Item (ix) of Schedule VII:

• Permits contribution to specified R&D projects and to public funded universities and certain organisations engaged in research in science, technology, engineering and medicine as eligible CSR.

### Mode of undertaking CSR:

• Companies (including Government companies) may undertake CSR activities directly by themselves OR in collaboration as shared responsibility with other companies, subject to the CSR Rules.

## 5. Penalty for Non-Disclosure (Section 134)

If the company fails to disclose the composition of the CSR Committee and reasons for not spending the required CSR amount in its Board's Report:

## Key Point

The Board must disclose reasons for not spending at least 2% of average net profit if it fails to do so.