Registration of entities for CSR Activities| All about Form CSR-1

The provisions of Corporate Social Responsibility (“CSR”) are incorporated under the Company Law to make companies more responsible towards betterment of the society and environment. All the companies which fulfill the specified criteria are required to spend 2% of their average profits, made during preceding 3 Financial Years, on the CSR Activities.

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To regulate the expenditure incurred by company on corporate social Responsibility (CSR) activities, the Company law has introduced a new form namely CSR-1. As per Rule 4(2) of The Companies (Corporate Social Responsibility Policy) Rules, 2014, every specified entity is required to register itself with central government by filing the Form CSR-1 electronically with the registrar.

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This article discusses the Form CSR-1 in details:

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1. What is Form CSR-1

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• Companies used to incur CSR expenditures through trusts without authentication whether trusts are genuinely registered under Income Tax Act or not.
• To keep a check on entities through which CSR expenditure is incurred, Form CSR-1 was introduced by the MCA.
• Form CSR-1 serves as the registration document of the entities through which CSR activities are carried out.
• Company law specifies a list of entities through which a company can incurre CSR expenditures such as Companies Registered under Section 8, Trust registered under Section 80G etc.
• Upon filing of Form CSR-1, a unique registration number is provided to such entities.

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2. Which entity is required to file Form CSR-1

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As per Rule 4(1) of The Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company shall ensure that CSR Activities are undertaken by the company itself or through following entities:

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1. A company established under section 8 of Companies Act or a registered public trust or a registered society (exempted under section 10(23C) or Registered under Section 12A and approved under 80 G of the Income Tax Act, 1961)(43 of 1961), established by the company;
2. a company established under section 8 of Companies Act or a registered trust or a society, established by the Central Government or State Government; or
3. Any entity established under an Act of Parliament or a State legislature; or
4. A company established under section 8 of Companies Act or a registered public trust or a registered society having an established track record of at least 3 years in undertaking similar activities.

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As per Rule 4(2) of the Rules, Every above-mentioned entity, who intends to undertake any CSR activity, shall register itself with the Central Government by filing the form CSR-1. 

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3. Purpose of filing of Form CSR-1

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Registration of entities for incurring CSR expenditure is done with following intent:

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1. To bring transparency in the activities of Corporate Social Responsibility by societies, trusts, and Section 8 companies, and to create a reliable databank for such a noble and social cause by corporate houses.
2. Establish genuineness of the entities to ensure that expenditure are incurred for the purpose of development of society and environment;
3. It also emphasizes the need for transparency and accountability in CSR activities, which can ultimately help build trust between companies and society at large.

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4. Information required to be furnished in Form CSR-1

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While filing form CSR-1, the entities are required to furnish following information:

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1. Nature of the entity from the given options, i.e., Companies established under Section 8 of Companies Act or Trust registered under Section 12A of Income Tax Act, Entity established under an Act of Parliament or State Legislature.
2. Whether the entity is established by any company or group of company;
3. If affirmative, then CIN and name of the company;
4. If negative, then whether the entity has established track record of three years in undertaking similar activities
5. Type of existing entity, i.e., Section 8 company, Trust, Society or other;
6. CIN/ Registration Number in case of Section 8 Company;
7. Name of entity
8. Date of incorporation
9. Address of entity
10. Email ID, to be verified through OTP;
11. PAN of the entity
12. Details of Directors/ Board of Trustees/ Chairman/ CEO/ Secretary/ Authorized Representatives of the entity

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Form CSR-1 is required to be certified by a Chartered Accountant, A Company Secretary or A cost account  in whole time Practise.

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5. Documents required to be attached to Form CSR-1

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Entities are required to upload following documents alongwith Form CSR-1

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1. Copy of certificate of registration
2. Copy of PAN of entity

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6. Allotment of Unique registration Number

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Upon successfully processing the form, an acknowledgement of the same will ne sent to the user in the form of an email to the email id of the entity. 

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Further, a digitally signed approval letter along with CSR Registration number with Format CSRXXXXXXXX where X represents system generated unique sequential number will be sent to the FO User as well as the email ID of the entity as entered in the eform.

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7. Significance of Unique registration number

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Upon filing of Form CSR-1 on MCA portal, Every entity shall be allotted a unique registration number. Such registration number is relevant for the companies to substantiate their CSR expenditure.

Expenses incurred through entities not having a unique CSR registration number shall not be considered as CSR expenditure for the purpose of Company law.

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8. What is the due date of filing of Form CSR-1

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The requirement of filing of Form CSR-1 has been implemented with effect from 1st April, 2021. However, there is no due date specified for filing of form CSR-1. Only upon obtaining a unique CSR registration number, an entity shall be entitled to receive funds for CSR activities from company in accordance with company law.

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9. Whether entities not having CSR registration numbers are not entitled to receive any donation

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E.g. A trust is registered under Section 12A and approved under Section 80G of Income Tax Act, 1961. However, such trust has not obtained a unique CSR registration number.

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In such scenarios, any person can provide a donation to such trust and claim deduction under Section 80G of Income Tax Act while filing Income Tax returns, including companies. 

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However, for the purpose of computation of CSR expenditure of 2% under Section 135 of Companies Act, expenditure incurred through such trust shall not be considered.

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10. Whether any annual compliance is specified for entities which has obtained a CSR registration number

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As on date, no annual compliance is specified for such entities under Company Law.