Section 135 of the Companies Act, 2013 makes Corporate Social Responsibility a statutory obligation for qualifying Indian companies. Around ten years of practice have added a lot of paperwork around that one sentence. This is a straight explanation of how CSR-1 registration works, why your NGO partner has to hold it, and how a Company Secretary or CSR head should verify eligibility before a rupee moves.
The Section 135 rule, in one line
An Indian company meeting any one of three thresholds in the immediately preceding financial year — a net worth of five hundred crore rupees or more, a turnover of one thousand crore rupees or more, or a net profit of five crore rupees or more — must spend at least two per cent of its average net profits from the last three years on CSR activities. The unspent portion generally has to be transferred to an unspent CSR account or, in some cases, to a Schedule VII fund.
What CSR-1 is
CSR-1 is a form filed by an implementing agency (typically an NGO) with the Ministry of Corporate Affairs to register itself for undertaking CSR activities. Since April 2021, an NGO must be CSR-1 registered before it can receive CSR funds from a company under Section 135. On successful registration, the MCA issues a unique CSR Registration Number in the format CSR00XXXXXX.
Nikhaar Foundation's CSR Registration Number, for reference, is CSR00107287.
What CSR-1 registration proves
- The organisation is a registered public trust, registered society, or Section 8 company
- It holds valid registration under Sections 12A and 80G of the Income Tax Act, 1961
- It has a track record of at least three financial years in undertaking similar activities (with limited exceptions)
- It has been through the identity and compliance verification the MCA applies at the point of CSR-1 registration
Schedule VII: the activities your CSR spending can fund
Section 135 is anchored to Schedule VII of the Companies Act, which lists the activities eligible as CSR spending. There are eleven main clauses. The ones a lot of small and mid-sized NGOs cover include:
- (i) Eradicating hunger, poverty and malnutrition; promoting healthcare and sanitation; safe drinking water
- (ii) Promoting education, including special education
- (iv) Ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and quality of soil, air and water
- (vii) Training to promote rural sports, nationally recognised sports, Paralympic sports and Olympic sports
A responsible CSR head will map every scoped project cleanly to one Schedule VII clause. This is what your Company Secretary will need to cite in the Annual Report on CSR.
How to verify an NGO's CSR-1 before signing the MoU
- Ask the NGO for their CSR Registration Number, PAN, and CSR-1 certificate. Everything reputable will send this in the first email.
- Cross verify on the MCA portal at mca.gov.in under the CSR services section. The number should return the NGO's name and registration details.
- Ask for a copy of the 12A certificate and the 80G certificate carrying the sixteen digit URN. These are pre-conditions of CSR-1 and confirm active tax status.
- Ask for the audited financial statements of the previous financial year and the last two years of programme reports.
- Ask for a costed proposal that maps to a specific Schedule VII clause.
The documentation pack your CSR committee will actually want
For a Company Secretary, the following pack tends to be sufficient to take a proposal to the CSR committee:
- CSR-1 certificate from the Ministry of Corporate Affairs
- Section 12A registration certificate
- Section 80G registration certificate with the URN
- PAN card of the organisation
- Cancelled cheque for the CSR bank account
- Organisation profile with governance, leadership, and past work
- Audited financials for the last completed financial year
- Costed project proposal aligned to Schedule VII
- Draft Memorandum of Understanding for the project
Common mistakes CSR heads should avoid
- Transferring CSR funds to a non-CSR-1 registered organisation. Ineligible under Section 135 as amended.
- Mapping a project to more than one Schedule VII clause without a clear split. Auditors flag this.
- Accepting an unsigned or generic utilisation report at project end. Insist on a formal utilisation report with photographs and beneficiary numbers.
- Missing the Impact Assessment requirement for larger projects. Above a specified threshold, an impact assessment by an independent agency is mandatory.
How to talk to Nikhaar Foundation about a CSR project
Nikhaar Foundation is CSR-1 registered (CSR00107287), 12A registered, and 80G registered (URN AAGCN8863PF20241) under the Income Tax Act, 1961. Our programmes map to Schedule VII (i), (ii), and (iv). If you would like a costed proposal that fits your Schedule VII focus and CSR budget, our CSR partnerships page has the full documentation checklist and the four step partnership process. Or write to info@nikhaarfoundation.org and we will come back within a working day.