Memorandum to the Joint Committee on the Corporate Laws (Amendment) Bill, 2026

Proposed Amendments to Section 135 (Corporate Social Responsibility), Companies Act, 2013

Submitted by: Mrunmai Patil · mrunmaipatil47@gmail.com · Pune, Maharashtra Date: 27 July 2026 Basis: Analysis of official National CSR Portal disclosures, FY 2014-15 to FY 2024-25 (eleven years, ₹2.88 lakh crore cumulative reported CSR expenditure)¹

The proposed amendment deals with compliance thresholds. It leaves the larger problems in India's CSR framework untouched: the money does not reach the regions that need it, nobody is accountable for what it achieves, and the public disclosures do not agree with each other. This submission recommends amendments that keep the framework easy to comply with while making it fairer and more transparent.

Summary of Recommendations

1. Keep the CSR base broad, and give smaller companies lighter compliance instead. Simpler obligations for smaller companies rather than letting them out altogether, with exemptions set to suit MSMEs.
2. Put a geographic-equity provision into Section 135, phased in over three to five years, to correct the regional concentration that the local-area preference in s.135(5) has produced without anyone intending it.
3. Strengthen what gets disclosed. Report by district and by outcome in Form CSR-2, and make the National CSR Portal's public reports add up.

These recommendations sit squarely with the constitutional commitment to balanced regional development under the Directive Principles of State Policy (Articles 38(2) and 39), and with the Government's Viksit Bharat 2047 vision.

1. Raising the threshold will shrink the CSR base and fix none of the main problems

The Bill raises only the net-profit trigger, from ₹5 crore to ₹10 crore. The net-worth threshold (₹500 crore) and the turnover threshold (₹1,000 crore) stay as they are. National CSR Portal data show the filing base is already unsteady: company counts moved from 25,181 (FY 2018-19) to 20,234 (FY 2021-22) to 28,534 (FY 2023-24).¹ Each company that would drop out under the new threshold contributes little on its own. Together they are what makes CSR a broad social contract rather than a levy on large firms. Their spending is also far more local and far more rural than the rest — exactly the flows the system is short of.

Recommendation: Retain the ₹5 crore trigger, and instead provide companies below ₹10 crore net profit with proportionate compliance relief: board-report-only disclosure, exemption from mandatory impact assessment, and access to pooled or aggregated spending routes — including the Social Stock Exchange instruments notified on 27 May 2026.² MSMEs falling within the CSR net solely by the profit trigger may additionally be exempted from any geographic-allocation requirement (see Recommendation 2). Relief through simplification, not exit.

2. CSR money goes where need is lowest, and the Bill does nothing about it

From National CSR Portal state-wise disclosures (FY 2023-24, total ₹35,918 crore)¹:

Independent analysis finds that approximately 70% of CSR funds bypass the Government's Aspirational Districts.⁴ Combining portal disclosures with NITI Aayog's Multidimensional Poverty Index, 61% of India's multidimensionally poor live in seven states that together receive 10.7% of state-attributable CSR — approximately ₹61 of CSR per poor person per year in Bihar against ₹64,308 in Goa.³

Nobody designed this. Industry is concentrated in the more developed states, so the local-area preference in s.135(5) — written to keep companies accountable to the places they affect — now pushes money toward the states that need it least. Eleven years of data show the gap widening rather than closing on its own.

Recommendation: Amend s.135(5) to (a) qualify the local-area preference for companies above a size threshold, and (b) introduce a minimum share of CSR obligation — suggested at 25%, phased in over three to five financial years (for example, 10% in year one rising to 25% by year five) — for Aspirational Districts and Blocks, the North-Eastern states, and Himalayan and island territories. Pooled spending through MCA-approved aggregation mechanisms (Section 8 companies, registered implementing agencies, or Social Stock Exchange-listed not-for-profit organisations) should qualify toward the floor, so that companies without field presence in these regions can comply without new overheads. MSMEs may be exempted as noted above.

3. Over ₹8,100 crore a year cannot be traced to any state, and the portal's reports do not agree with each other

• "Pan India" and centralised-fund entries account for 22.7% of FY 2023-24 expenditure (₹8,138 crore) with no state — let alone district — attribution: more than the bottom 25 states and Union Territories combined.¹
• The portal's FY 2024-25 reports currently cannot be made to agree: the sector-wise and state-wise reports show ₹40,794 crore, while the PSU/Non-PSU report shows ₹5,957 crore from 370 companies.¹
• No outcome field exists in public reporting; ₹3,223 crore was transferred to Unspent CSR Accounts in FY 2024-25, and 315 companies did not meet the 2% obligation.⁵

Recommendation: Provide, through this Bill or the rules made under it: (a) district-coded project reporting in Form CSR-2; (b) a standard outcome-indicator block for each Schedule VII head, following the assurance principles SEBI already applies under BRSR Core; and (c) an annual reconciliation statement for the National CSR Data Portal. The cost to companies is minimal, because the underlying data already sits in their implementing agencies' systems.

Why this matters for the Committee's timeline

CSR now moves ₹40,794 crore a year and is growing at roughly 15% annually. On that trend it reaches ₹1 lakh crore a year by the mid-2030s. This Bill is the first chance to amend Section 135 since 2021. The amendments proposed here would keep what makes India's CSR framework distinctive in the world, while making that spending reach the places it is meant to, in ways that can be measured and that match national priorities.

Notes and sources

1. Computed from National CSR Portal (csr.gov.in) public exports: PSU/Non-PSU-wise, Development Sector-wise, State-wise, and Dynamic CSR reports, FY 2014-15 to FY 2024-25. All figures re-verified against source files; FY 2024-25 total independently corroborated by PRIME Database/India CSR reporting. Full methodology, dataset, and interactive charts: lofl.world/reports/
2. MCA Gazette Notifications dated 27 May 2026 (CSR contributions to Social Stock Exchange-listed NPOs; zero coupon zero principal instruments).
3. CSR-per-poor-person computed as: state CSR expenditure (FY 2023-24, portal) ÷ (state population, 2023 projections × MPI headcount ratio, NITI Aayog National Multidimensional Poverty Index — A Progress Review 2023, 2019-21 series). Methodology published at lofl.world/reports/csr-misallocation-index.html
4. Outlook Business, "India's CSR Funds Fail to Reach Neediest Regions" (2026), and India CSR Summit 2026 proceedings on Aspirational Districts and Blocks.
5. PRIME Database / India CSR analysis of FY 2024-25 filings; NSE-listed company CSR expenditure ₹22,212 crore (+23%).