CSR Applicability Checker — Section 135 Companies Act 2013
Free 30-second tool: enter your company's net worth, turnover, and net profit for the immediately preceding financial year. Tool tests all three Section 135 thresholds, tells you whether you are in mandatory CSR scope, and computes the 2% spend obligation.
Authority: Section 135 of the Companies Act 2013 + Companies (CSR Policy) Rules 2014 (as amended through Companies (CSR Policy) Amendment Rules 2022). Current thresholds apply for FY 2025-26 reporting. Pending: Corporate Laws (Amendment) Bill 2026 proposes raising the net-profit threshold to ₹10 crore; not yet enacted (in JPC since 23 March 2026).
The three Section 135 thresholds
A company is in mandatory CSR scope if it meets any one of the following during the immediately preceding financial year. The test is disjunctive — a single breach triggers Section 135.
| Threshold | Current limit | Pending Bill 2026 | Computed per |
|---|---|---|---|
| Net worth | ≥ ₹500 crore | No change proposed | Section 2(57) |
| Turnover | ≥ ₹1,000 crore | No change proposed | Section 2(91) |
| Net profit | ≥ ₹5 crore | Proposed ≥ ₹10 crore (in JPC, not yet enacted) | Section 198 |
The 2% spend obligation
Under Section 135(5), an in-scope company must spend at least 2% of the average net profits (computed per Section 198) of the three immediately preceding financial years on activities listed in Schedule VII of the Act.
Where the company has not completed 3 financial years, the average is computed for the period the company has been in existence.
Spend is routed through CSR Rules-compliant implementing channels: (a) by the company directly, (b) through a registered Section 8 company / registered public trust / registered society established by the company or its holding / subsidiary, or (c) through any other such body registered with the MCA's CSR-1 form. The CSR-2 form is filed annually with the Annual Report disclosing compliance.
Unspent CSR — the two-track regime
Per the Companies (Amendment) Act 2020 + Companies (CSR Policy) Amendment Rules 2021:
- If unspent amount relates to an ongoing project: transfer to a separate Unspent CSR Account within 30 days of FY-end; spend within 3 financial years. If still unspent thereafter, transfer to a Schedule VII fund.
- If unspent amount does not relate to an ongoing project: transfer to a fund specified in Schedule VII (e.g. PM National Relief Fund, Swachh Bharat Kosh) within 6 months of FY-end.
Failure to comply attracts penalty under Section 135(7) — twice the unspent amount or ₹1 crore (whichever is less) on the company; ₹2 lakh or one-tenth the unspent amount (whichever is less) on each officer in default.
Exiting CSR scope — Rule 3(2) of CSR Rules 2014
A company that ceases to meet all three Section 135(1) thresholds for three consecutive financial years is not required to comply with the provisions of Section 135 until it again meets a threshold (per Rule 3(2) of the Companies (CSR Policy) Rules 2014). The 3-FY cooling period is mandatory — a single year below is not enough to exit scope.
Don't confuse this with Section 135(9) (inserted by Companies (Amendment) Act 2020) — that's a separate provision allowing in-scope companies to dispense with the CSR Committee if their required CSR spend does not exceed ₹50 lakh (proposed to be raised to ₹1 crore under the pending Corporate Laws (Amendment) Bill 2026). The CSR Committee carve-out and the 3-FY exit rule are independent provisions.
FAQs
What are the three Section 135 CSR applicability thresholds?
Section 135(1) applies if any one is met during the immediately preceding FY: net worth ≥ ₹500 crore, OR turnover ≥ ₹1,000 crore, OR net profit ≥ ₹5 crore. The test is disjunctive — a single threshold triggers full Section 135 obligations.
How is the 2% spend computed?
Section 135(5): 2% of average net profits (per Section 198) of the immediately preceding three financial years. Exclude profits from overseas branches and dividends from other CSR-compliant Indian companies. Where 3 FYs have not been completed, average over actual existence period.
What is the pending Corporate Laws (Amendment) Bill 2026?
Introduced in Lok Sabha 23 March 2026, referred to a Joint Parliamentary Committee same day. Four CSR-relevant proposals: (1) Section 135(1) net-profit threshold ₹5cr → ₹10cr (net-worth + turnover unchanged); (2) Section 135(9) CSR Committee exemption ₹50 lakh → ₹1 crore; (3) Unspent CSR Account transfer 30 days → 90 days; (4) Central Government empowered to exempt prescribed classes from CSR. Until Presidential assent + MCA notification, all current thresholds and timelines remain binding.
Does Section 135 apply to private limited companies?
Yes. Listing status is irrelevant — Section 135 applies to every company meeting any threshold, including private limiteds and foreign companies operating in India through a branch / project office.
When does a company exit CSR scope?
Per Rule 3(2) of the Companies (CSR Policy) Rules 2014, a company that ceases to meet all three Section 135(1) thresholds for three consecutive financial years exits scope. The 3-FY cooling period is mandatory.