CSR rules in India: a guide for infrastructure projects

Who must spend on CSR

Section 135 of the Companies Act, 2013 applies to a company that, in the preceding financial year, had a net worth of ₹500 crore or more, a turnover of ₹1,000 crore or more, or a net profit of ₹5 crore or more. Meeting any one of these is enough.

The Corporate Laws (Amendment) Bill, 2026 proposes raising the net profit threshold to ₹10 crore. It was introduced in March 2026 and a Joint Parliamentary Committee reported on it in August 2026, but it has not yet become law.

How much

A covered company must spend at least 2% of its average net profit for the three immediately preceding financial years on CSR activities, under a policy approved by its board.

Administrative overheads can be at most 5% of the year's CSR spend. Costs that are directly part of designing, carrying out and monitoring a specific project count as project spend, not overheads.

What counts: Schedule VII

CSR spend must go to activities listed in Schedule VII. The ones most relevant to infrastructure are:

• Promoting health care and sanitation, and making safe drinking water available.
• Promoting education.
• Ensuring environmental sustainability and conserving natural resources, including the quality of soil, air and water.
• Rural development projects.
• Slum area development.

Ongoing projects and unspent amounts

• An ongoing project is a multi-year project that runs for up to three years after the year it starts, approved as such by the board.
• Money set aside for an ongoing project but not spent by year-end must go into a separate Unspent CSR Account within 30 days of the end of the financial year.
• That money must be spent within the next three financial years. Anything still left goes to a Schedule VII fund (such as the PM CARES Fund or PM National Relief Fund) within 30 days after the third year.
• Unspent money that is not tied to an ongoing project must go to a Schedule VII fund within six months of the end of the financial year.

Implementing agencies and CSR-1

A company can run CSR projects itself or through an implementing agency: a Section 8 company, a registered trust or society, or an entity set up by government. Since April 2021, every implementing agency must register with the Ministry of Corporate Affairs by filing form CSR-1, which gives it a CSR registration number.

The CSR-1 form was replaced in July 2025. The revised form asks for 12A and 80G details and requires certification by a practising chartered accountant, company secretary or cost accountant.

Who owns what gets built

A capital asset created with CSR money cannot be owned by the company. It must be held by the implementing agency, by the beneficiaries (for example a self-help group or community body) or by a public authority such as a school, panchayat or municipal body. Plan the handover before construction starts.

Impact assessment

A company whose average CSR obligation was ₹10 crore or more over the three preceding financial years must get an independent impact assessment of each project with an outlay of ₹1 crore or more, once the project has been complete for at least a year.

The cost of the assessment can be counted as CSR spend, up to 2% of that year's CSR spend or ₹50 lakh, whichever is higher. Good records during construction, with photos, measurements and costs, make the assessment faster and cheaper.

What changed in 2026

Amendment rules notified on 27 May 2026 let companies spend up to 10% of their CSR budget on zero coupon zero principal instruments issued by non-profits listed on a Social Stock Exchange. Projects funded this way are exempt from impact assessment. The rules did not change who must spend or how much.

Frequently asked questions