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 addresses compliance thresholds but leaves unresolved the larger structural challenges in India's CSR framework: geographic inequality in fund distribution, weak outcome accountability, and inconsistent public disclosure. This submission recommends amendments that preserve ease of doing business while improving equity and transparency.

Summary of Recommendations

1. Retain a broad CSR base with proportionate compliance relief — simplification for smaller companies rather than exit from the mandate, with exemptions calibrated for MSMEs.
2. Introduce a statutory geographic-equity provision in Section 135, phased over three to five years, to correct the unintended regional concentration produced by the local-area preference in s.135(5).
3. Strengthen disclosure architecture — district-level and outcome reporting in Form CSR-2, and reconciliation of the National CSR Portal's public reports.

These recommendations are consistent 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. The proposed threshold amendment is likely to reduce the CSR base while leaving the principal structural challenges unaddressed

The Bill raises only the net-profit trigger (₹5 crore → ₹10 crore), leaving the net-worth (₹500 crore) and turnover (₹1,000 crore) thresholds unchanged. National CSR Portal data indicate that the filing base is already unstable: company counts moved from 25,181 (FY 2018-19) to 20,234 (FY 2021-22) to 28,534 (FY 2023-24).¹ The companies that would exit under the revised threshold are small contributors individually, but collectively they anchor CSR's character as a broad social contract — and smaller-company CSR is disproportionately local and rural, precisely the flows the system currently lacks.

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 geography is inverted relative to need — the Bill does not address this issue

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

The causal mechanism is structural rather than intentional: since industrial activity is concentrated in relatively developed states, the local-area preference in s.135(5) — a provision written for accountability — has unintentionally reinforced regional disparities in CSR allocation. Eleven years of data indicate the pattern is widening, not self-correcting.

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. Disclosure architecture: over ₹8,100 crore per year is not geographically attributable, and the portal's reports require reconciliation

• "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 are presently irreconcilable: sector- 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 consequential rules: (a) district-coded project reporting in Form CSR-2; (b) a standard outcome-indicator block per Schedule VII head, aligned with the assurance principles SEBI already applies under BRSR Core; and (c) an annual reconciliation statement for the National CSR Data Portal. The compliance cost is minimal — the underlying data already exists in companies' implementing-agency systems.

Why this matters for the Committee's timeline

CSR is now a ₹40,794 crore-per-year instrument growing at approximately 15% annually — on trend, ₹1 lakh crore per year by the mid-2030s. This Bill is the first legislative opening on Section 135 since 2021. The proposed amendments would preserve India's globally distinctive CSR framework while ensuring that corporate social responsibility contributes more effectively to equitable, measurable, and nationally aligned development.

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%).