## CSR Expenditure: Schedule III Disclosure Requirements

### Legal Framework

Section 135, Companies Act 2013 — mandates CSR spending for eligible companies.
Schedule III, Companies Act 2013 — prescribes the specific disclosures required in financial statements.

### Mandatory Disclosures (Schedule III)

#	Disclosure Item	Example
i	Amount required to be spent during the year	₹14.00 lacs
ii	Amount of expenditure incurred	₹14.50 lacs
iii	Shortfall at end of year	NIL (spent more than required)
iv	Total of previous years' shortfall	NA (first time)
v	Reason for shortfall	NA
vi	Nature of CSR activities (with implementing agency details)	Women empowerment via implementing agency
vii	Details of related party transactions in relation to CSR expenditure per applicable AS	NIL
viii	Provision movements for contractual CSR obligations	NIL

### Key Points for Exams

If actual spend exceeds the mandatory amount → shortfall = NIL.
If implementing agency is not a related party → related party transaction disclosure = NIL.
Even if there is NIL shortfall, all eight items must still be disclosed.

Worked example

### Example 1

Prudent Enterprises Private Limited:

Facts: First-time CSR spend; required ₹14.00 lacs; incurred ₹14.50 lacs; spent on women empowerment via non-related-party implementing agency.

Disclosure:

Amount required: ₹14.00 lacs
Amount incurred: ₹14.50 lacs
Shortfall: NIL (excess spend of ₹0.50 lacs)
Previous years shortfall: NA (first time)
Reason for shortfall: NA
Nature: Women empowerment through implementing agency
Related party transactions: NIL
Provision movements: NIL

Note: The ₹0.50 lacs excess spend cannot be carried forward as credit against future years' CSR obligation.

⚠️ Common exam mistakes

Omitting items that are 'NIL' — all eight disclosure items are mandatory even if the value is NIL or NA
Not specifying the nature of CSR activities and whether an implementing agency was used
Forgetting to disclose related party transactions in CSR even when the answer is NIL
Not separately showing provision movements for contractual CSR obligations

Reference: Schedule III – Notes to Accounts: CSR Expenditure Disclosure — Schedule III to the Companies Act, 2013; Section 135 of the Companies Act, 2013

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CSR Expenditure Disclosure under Schedule III

Worked example

⚠️ Common exam mistakes