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Under the Companies Act, 2013, consider the following statements regarding CSR eligibility and compliance:
- Companies with a net worth of ₹500 crore or more are required to undertake CSR activities.
- Non-compliance with CSR obligations can result in financial penalties, but company officials are not personally liable.
- Any unspent CSR funds can be carried forward indefinitely if not utilized in the designated year.
Which of the statements given above is/are correct?
(a) 1 only
(b) 1 and 3 only
(c) 2 and 3 only
(d) 1, 2, and 3
Solution: A
Only Statement 1 is correct.
CSR compliance is mandatory for companies with a net worth of ₹500 crore or more, an annual turnover of ₹1,000 crore or more, or a net profit of ₹5 crore or more.
Statement 2 is incorrect because both the company and responsible officers may face penalties for non-compliance. Officers can be fined or even face imprisonment for failing to meet CSR obligations.
Statement 3 is also incorrect as per the 2019 amendment; unspent CSR funds must be transferred to a specified fund by the end of the fiscal year and utilized within three years. If unutilized, these funds must be deposited into a government-specified fund ensuring timely and effective CSR expenditure
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