A short history of CSR in India

Corporate social responsibility (CSR) in India began as philanthropy, the giving of business families and merchants, and became law only in 2014. Between those points came Gandhi’s idea of trusteeship, a decade of voluntary guidelines, and then Section 135 of the Companies Act, 2013, which has been tightened several times since it came into force on 1 April 2014.

This guide tells the story in order, with the dates you can rely on. It’s for students, new CSR and NGO staff, and anyone who meets an old policy, template or article and needs to know which version of the rules it was written for.

Before the law: giving and trusteeship

Long before anyone used the phrase “corporate social responsibility”, Indian merchants and business families funded schools, hospitals, wells, temples and resthouses, and some set up charitable trusts. This giving was voluntary and personal, shaped by religious and community traditions rather than by company law.

The idea most often linked to Indian CSR is Mahatma Gandhi’s trusteeship. Gandhi argued that people with more wealth than they needed should treat the surplus as held in trust for society. Writing in his journal Harijan in February 1942, he told the wealthy to “understand that your wealth is not yours; it belongs to the people”, and to keep what they needed and use the rest for society.

His co-workers later drafted a “practical trusteeship formula”, which Gandhi amended, and which was published in Harijan in October 1952, after his death. It said that trusteeship “does not exclude legislative regulation of the ownership and use of wealth”. The CSR law of 2013 is a long way from Gandhi’s economics, but it shares two of his starting points: that business owes something to the society around it, and that the law may say so.

2009 to 2012: voluntary guidelines, and budgets for public sector companies

The first official steps were guidance, not law.

• 2009: the Ministry of Corporate Affairs (MCA) issued Voluntary Guidelines on Corporate Social Responsibility, which it later described as the first step towards mainstreaming business responsibility.
• April 2010: the Department of Public Enterprises issued guidelines requiring central public sector enterprises to set a CSR budget each year by board resolution, as a percentage of the previous year’s net profit: 3% to 5% for those with profits below ₹100 crore, 2% to 3% (at least ₹3 crore) for profits of ₹100 crore to ₹500 crore, and 0.5% to 2% above ₹500 crore. Loss-making enterprises didn’t have to earmark funds, and the budgets didn’t lapse. Revised guidelines on CSR and sustainability applied from 1 April 2013.
• 2011: the MCA replaced its 2009 guidelines with the National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business, after consultation with business, academics, civil society and government.
• 2012: SEBI, the markets regulator, required the 100 largest listed companies by market capitalisation to file Business Responsibility Reports against those guidelines. The requirement was extended to the top 500 in 2015-16.

So by 2013 central public sector enterprises already had CSR budgets by government direction, and the largest listed companies were reporting on responsible business. Private companies’ CSR spending was still voluntary.

2013 and 2014: CSR becomes law

Parliament passed the Companies Act, 2013, which received the President’s assent on 29 August 2013. Its Section 135 required every company above a threshold to form a CSR committee, adopt a CSR policy and spend at least 2% of its average net profit on activities listed in Schedule VII.

The thresholds were the ones that still apply: net worth of ₹500 crore, turnover of ₹1,000 crore or net profit of ₹5 crore. The government notified the Companies (Corporate Social Responsibility Policy) Rules, 2014 on 27 February 2014, and Section 135, Schedule VII and the Rules came into force on 1 April 2014. India became one of very few countries where CSR spending is a legal duty; Mauritius had made CSR spending compulsory in 2009.

The early clarifications set the tone. In June 2014 the MCA’s General Circular 21/2014 said that Schedule VII must be “interpreted liberally”, and that CSR should be run as projects or programmes, not one-off events such as marathons or award ceremonies. From the 2014-15 financial year, an Explanation added to section 37(1) of the Income-tax Act, 1961 made clear that CSR spending wasn’t a deductible business expense.

2014 to 2020: comply or explain

For almost seven years, the law worked on comply or explain. A covered company had to spend 2%, but if it didn’t, its board only had to give the reasons in its report. There was no penalty for the shortfall itself.

The rules were adjusted in this period:

• Schedule VII grew. Slum area development was added in August 2014, contributions to the Swachh Bharat Kosh and the Clean Ganga Fund in October 2014, disaster management in May 2019 and the PM CARES Fund in May 2020 (with effect from 28 March 2020). Veterans of the Central Armed Police Forces and Central Para Military Forces were added to the item on armed forces veterans, and the item on research was rewritten in 2019 and 2020.
• The coverage test changed. From 19 September 2018, coverage depended on the “immediately preceding financial year” rather than “any financial year”.
• COVID-19. In March 2020 the MCA confirmed that spending on COVID-19 was eligible CSR.

In 2019 a High Level Committee on CSR, chaired by the Secretary of the MCA, reported on the whole framework. Several of its ideas were later adopted in some form: registering implementing agencies on an MCA portal, a CSR exchange portal, exempting smaller obligations from the committee requirement, impact assessment for larger companies, and treating defaults as civil wrongs. Others, such as making CSR spending tax-deductible, weren’t adopted.

2021: comply or transfer

The biggest change came on 22 January 2021, when amendments to Section 135 made by the Companies (Amendment) Acts of 2019 and 2020 took effect, together with a rewritten set of CSR Rules. The regime moved from comply or explain to comply or transfer:

• Unspent money must move. Money for an ongoing project goes to a special Unspent CSR Account within 30 days of the year’s end and must be spent within three years; other unspent money goes to a Schedule VII fund within six months.
• Defaults bring civil penalties on the company and every officer in default. A 2019 amendment would have punished defaults with fines and even imprisonment; the 2020 amendment replaced that with civil penalties, and non-compliance has been “a civil wrong” since 22 January 2021.
• Smaller obligations need no committee. Where the obligation is ₹50 lakh or less, the board does the committee’s work.
• New spending rules: excess spending can be set off over three years; administrative overheads are capped at 5%; capital assets must be held by permitted bodies; larger companies must commission impact assessments; and contributions to an organisation’s corpus no longer count.
• Implementing agencies must register. From 1 April 2021, every implementing agency had to file Form CSR-1 with the MCA.

In August 2021 the MCA issued its FAQs on CSR (General Circular 14/2021), which replaced its earlier clarifications and are still the ministry’s main guidance. See the CSR Rules explained and Section 135, clause by clause for the detail.

2022 to 2025: refinements and new forms

• February 2022: an annual filing, Form CSR-2, was added to the Companies (Accounts) Rules, 2014, giving the government project-level CSR data. See Form CSR-2.
• 20 September 2022: another amendment made a CSR committee compulsory while any money sits in an Unspent CSR Account, let more kinds of institution act as implementing agencies, changed the cap on impact assessment costs to 2% of CSR spending or ₹50 lakh, whichever is higher, and simplified the annual report on CSR.
• 2025: a new version of Form CSR-1 took effect on 14 July 2025, asking agencies for more detail, and Form CSR-2 moved onto the MCA’s new filing system, linked to the financial statements filing. In August 2025, Parliament enacted the Income-tax Act, 2025.

2026: a new tax law, the Social Stock Exchange and a pending Bill

• 1 April 2026: the Income-tax Act, 2025 came into force. Its Section 34(2)(b) keeps CSR spending out of deductible business expenses, as the 1961 Act did. See CSR and income tax.
• 27 May 2026: the MCA added item (xiii) to Schedule VII and a new Rule 4A, letting companies spend up to 10% of their CSR on zero coupon zero principal instruments issued by not-for-profits on a Social Stock Exchange. See the Social Stock Exchange.

Over the same period, CSR spending grew from ₹10,065.93 crore in 2014-15 (MCA figures, as reported by India CSR in June 2026) to ₹34,908.75 crore in 2023-24 (Press Information Bureau, 10 February 2026), about 3.5 times. See India’s CSR in numbers.

Key dates at a glance

What the history means today

Most CSR mistakes come from following an old version of the rules. Policies, agreement templates and articles written before 2021 are still in circulation, and some advice predates the September 2022 changes. A few examples:

• A policy that says unspent money “will be carried forward” was written for comply or explain. Today the money must be transferred.
• A template that counts a contribution to an NGO’s corpus as CSR predates 22 January 2021.
• An agreement that caps impact assessment costs at “5% or ₹50 lakh, whichever is less” predates 20 September 2022.

Two habits help. Date every policy and template, noting which version of the rules it follows. And when you read older guidance, check whether a later amendment has overtaken it. Our guide to what CSR is sets out the law as it stands in October 2026.