The CSR Rules: what they say and how they’ve changed

The CSR Rules are the detailed regulations that sit under Section 135 of the Companies Act, 2013. Their formal name is the Companies (Corporate Social Responsibility Policy) Rules, 2014, and they decide most of the practical questions a CSR team faces: which NGOs can implement projects, what counts as an overhead, who may own a CSR-funded building, and when an impact assessment is required.

The central government makes and amends them by notification, so they change far more often than Section 135 itself. A policy, template or agreement written for one version can be wrong under the next. This guide goes through the Rules one at a time as amended up to 3 October 2026, sets out how they have changed since 2014, and explains how to read the Ministry of Corporate Affairs’ (MCA) FAQs alongside them.

How the Rules fit with Section 135

CSR law is a stack of layers, each resting on the one above:

Where the layers seem to disagree, the higher one wins: the Act over the Rules, and the Rules over a circular. Rules and changes to the Schedules must be laid before both Houses of Parliament, which can modify or annul them, but they take effect when notified.

Rules 1 to 3: commencement, definitions and who is covered

Rule 1 names the Rules and brings them into force on 1 April 2014.

Rule 2 holds the definitions, and several of them carry real weight:

• Administrative overheads (2(1)(b)): the company’s costs of general management and administration of its CSR function, not the costs of designing, running, monitoring and evaluating a particular project. See CSR budgets and the 5% overhead cap.
• Corporate social responsibility (2(1)(d)): activities undertaken under Section 135 in line with the Rules, minus six excluded kinds of activity, such as the company’s normal business, activities outside India and political contributions. See what doesn’t count as CSR.
• CSR policy (2(1)(f)): the board’s statement of approach and direction, including the principles for choosing, running and monitoring activities and for drawing up the annual action plan.
• International organisation (2(1)(g)): one notified under the United Nations (Privileges and Immunities) Act, 1947.
• Net profit (2(1)(h)): Section 198 profit, leaving out overseas branches’ profits and dividends from Indian companies that comply with Section 135. See calculating net profit for CSR.
• Ongoing project (2(1)(i)): a multi-year project lasting no more than three years after the year it started, or a one-year project the board extends with reasonable justification.
• Public authority (2(1)(j)): as defined in the Right to Information Act, 2005.
• Not-for-profit organisation and zero coupon zero principal instrument (2(1)(ha) and 2(1)(l)), both added in May 2026 for the Social Stock Exchange route.

Rule 3 says who must comply: every company that meets a Section 135(1) test, including holding and subsidiary companies, and foreign companies with a branch or project office in India, whose figures come from the accounts of their Indian business. Since 20 September 2022, a proviso has required any company with money in its Unspent CSR Account to have a CSR committee. The same amendment omitted Rule 3(2), which used to release a company that fell outside the tests for three years in a row.

Rules 4 and 4A: who carries out CSR

Rule 4 is the implementation rule, and it has six parts:

1. Eligible agencies (4(1)). The board must ensure CSR is carried out by the company itself or through one of four kinds of implementing agency: (a) a Section 8 company, registered public trust or registered society set up by the company, alone or with others, with the required income-tax registrations; (b) one set up by the central or a state government; (c) a body established under an Act of Parliament or a state law; or (d) any other Section 8 company, registered public trust or society with those tax registrations and at least three years’ track record in similar activities.
2. Form CSR-1 (4(2)). From 1 April 2021, every such entity that intends to undertake CSR must register with the government on Form CSR-1 and receive a CSR registration number. See Form CSR-1.
3. International organisations (4(3)) may help design, monitor and evaluate projects, and train the company’s CSR staff, but can’t implement them.
4. Collaboration (4(4)). Companies can work together on a project if each company’s CSR committee can report on it separately.
5. The CFO’s certificate (4(5)). The board must satisfy itself that money disbursed was used as approved, and the chief financial officer must certify it.
6. Ongoing projects (4(6)). The board monitors each one against its approved timeline and yearly budget.

Rule 4A, added on 27 May 2026, lets a company carry out CSR by subscribing to zero coupon zero principal instruments issued by not-for-profit organisations on a Social Stock Exchange, for up to 10% of its total CSR expenditure in the year. Projects funded this way are exempt from the company’s impact assessment duty. See the Social Stock Exchange and ways to implement CSR.

Rule 5, and the missing Rule 6: the committee, the plan and the policy

Rule 5(1) sets the committee’s make-up for each kind of company, including foreign companies. Rule 5(2) makes the committee formulate and recommend an annual action plan, which must list the approved projects, how each will be executed, how the money will be used and when, the monitoring and reporting arrangements, and any need and impact assessment. A proviso lets the board alter the plan during the year on the committee’s recommendation, with reasonable justification. Our guides to the CSR committee and the CSR policy and annual action plan go deeper.

Rule 6, headed “CSR Policy”, was omitted by the January 2021 amendment. The original version told companies what their policy had to contain. Today the policy is defined in Rule 2(1)(f), and the annual action plan in Rule 5(2) carries most of what the old rule asked for. Older templates that cite Rule 6 are a sign the document predates 2021.

Rule 7: what spending counts

Rule 7 holds the four spending rules people argue about most:

Before 2021, Rule 7 also counted “contribution to corpus” as CSR spending. That was dropped in the rewrite, and the MCA says corpus contributions haven’t counted since 22 January 2021 (FAQ 3.5).

Rules 8 to 10: reporting, the website and unspent money

Rule 8 covers reporting. The board’s report must include an annual report on CSR in the format in Annexure I or Annexure II to the Rules, as applicable; a foreign company includes it with the balance sheet it files. Rule 8(3) requires companies with an average CSR obligation of ₹10 crore or more over the three preceding years to have projects of ₹1 crore or more independently assessed, at least a year after completion, and caps the cost that counts as CSR at 2% of the year’s CSR expenditure or ₹50 lakh, whichever is higher. See the annual report on CSR and impact assessment.

Rule 9 requires the board to publish the committee’s composition, the CSR policy and the projects it approves on the company’s website, if it has one.

Rule 10 says that until a fund is specified for the purpose, unspent CSR money that must go to a Schedule VII fund can go to any fund in the Schedule. See unspent CSR money.

The annual filing, Form CSR-2, isn’t in the CSR Rules at all. It comes from Rule 12(1B) of the Companies (Accounts) Rules, 2014, added in February 2022. See Form CSR-2.

How the Rules have changed, 2014 to 2026

We found no later amendment up to 3 October 2026. The bigger story, including the years before 2014, is in our short history of CSR in India.

The MCA’s FAQs and how to read them

On 25 August 2021 the MCA’s CSR Cell issued General Circular 14/2021, a set of frequently asked questions on CSR. It replaced the Ministry’s earlier CSR clarifications, issued between 2014 and 2018. By convention, “FAQ 7.4” means question 7.4 in that circular. The questions run in ten groups:

Three rules of thumb help:

• They aren’t law. The FAQs are the Ministry’s reading of the Act and the Rules. Where they conflict, the Act and the Rules prevail. But the MCA enforces Section 135, so depart from an FAQ only on considered legal advice.
• They are frozen at August 2021. Later amendments can overtake them. FAQ 9.5 still gives the old impact assessment cost limit (5% or ₹50 lakh, whichever is less), which changed in September 2022, and the FAQs say nothing about Rule 4A.
• Quote the words, not your memory. Several answers turn on precise wording. FAQ 7.4, for example, says disbursal to an implementing agency isn’t spending “unless the implementing agency utilises the whole amount”, which is why tranches are timed so money can be used within the year.

The CSR Law in Depth course in the SocioStory Academy works through the Rules with scenarios and calculations.