India's New CSR-1 Form Applicability and Compliance Guide

In India, Corporate Social Responsibility (CSR) activities are governed by the Companies Act, 2013, which outlines specific guidelines for businesses to contribute to social, environmental, and community development. 

For companies wishing to engage in CSR activities, CSR-1 registration has become a critical requirement, with the average actual CSR spend per company increasing to INR 54 Cr in FY 2023-24 from INR 22 Cr in FY 2014-2015. This process ensures transparency, compliance, and effective channeling of funds into sustainable and impactful projects.

In this blog, we will break down everything you need to know about the CSR-1 form applicability, including the detailed steps for registration and CSR activities that are eligible for funding and common challenges businesses face during CSR registration.

Key Takeaways

• CSR-1 registration is mandatory for nonprofits in India to receive CSR funds.
• Eligibility applies to NGOs, trusts, societies, and Section 8 companies only.
• CSR-1 ensures transparency and accountability in fund allocation.
• The MCA portal is used for filing the CSR-1 form and document submission.
• Businesses must ensure their local partners are CSR-1 registered to allocate CSR funds.

What is the CSR-1 Form?

The CSR-1 form is a registration form required for organizations that intend to receive Corporate Social Responsibility (CSR) funding from companies in India. It serves as a mandatory compliance requirement for NGOs, trusts, societies, and Section 8 companies, organizations that wish to accept CSR funds from businesses in India.

CSR-1 registration ensures that the receiving organizations meet the legal criteria set out by the Ministry of Corporate Affairs (MCA) and are eligible to participate in CSR funding programs. It allows businesses and corporate donors to trust that the funds they allocate for CSR activities will be utilized for the intended social causes in a transparent and accountable manner.

Registering a new business demands airtight compliance. VJM Global simplifies it for your companies through end-to-end audit, tax, and regulatory support. From FEMA advisory to GST audit and transfer pricing management, we ensure every compliance box is checked before your operations go live.

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CSR Applicability

According to Section 135 of the Companies Act, 2013, CSR provisions are applicable to companies meeting the following criteria:

• Net worth of ₹500 crore (approx. USD 67 million) or more.
• Turnover of ₹1000 crore (approx. USD 134 million) or more.
• Net profit of ₹5 crore (approx. USD 670,000) or more.

These companies must allocate at least 2% of their average net profits over the last three financial years to CSR activities.

Also Read: Offshoring Audit Work from the US to India: Key Challenges and Fixes

Filing of CSR-1 Form

Filing the CSR-1 form is an essential step for organizations to become eligible for CSR funding. The form requires the following details:

• Nature of the entity: The type of organization applying (NGO, Trust, Society, or Section 8 Company).
• Date of registration: The date of incorporation or registration under Indian law.
• PAN of the entity: The company’s Permanent Account Number, which is essential for tax purposes.
• Details of board members/trustees: Information about the governance structure.
• DSC (Digital Signature Certificate): The authorized representative’s DSC is mandatory for the filing process.
• Professional Certification: Certification by a Chartered Accountant (CA), Company Secretary (CS), or Cost Accountant (CMA).

Now that we understand the CSR-1 form, let’s explore who is eligible to apply for this registration.

Who Can Apply for CSR-1 Registration?

Several types of entities can apply for CSR-1 registration to be eligible for CSR funding, including:

• Non-Governmental Organizations (NGOs): Non-profit organizations that work on social and environmental causes.
• Trusts: Registered charitable organizations focused on social good.
• Societies: Non-profit societies that provide public benefits.
• Section 8 Companies: Non-profit companies incorporated under Section 8 of the Companies Act, 2013, specifically designed for promoting charitable objectives.

These entities must submit their application to the Ministry of Corporate Affairs (MCA), providing the necessary documents and certifications to qualify for receiving CSR funds.

Next, we’ll examine why CSR-1 registration is important for businesses looking to contribute to social causes in India.

Why is CSR-1 Registration Important?

CSR-1 registration is a crucial step for entities seeking CSR funds in India. Here are the key reasons why registration is vital:

• Ensures transparency in CSR fund allocation: Registration helps monitor and track how CSR funds are used, ensuring they reach the intended beneficiaries.
• Mandatory for receiving CSR funds: Companies wishing to contribute CSR funds must work with registered entities, as only such organizations are legally eligible.
• Prevents misuse of CSR funds: It ensures that the funds allocated are used for genuine and impactful CSR activities, in line with the government’s rules.
• Increases credibility: Registration with MCA boosts the credibility of nonprofits, making it easier to gain trust and attract more CSR contributions.

Also Read: What Is a Fractional Controller and Why US Firms Outsource to India

Now, let’s take a closer look at which CSR activities are eligible to receive funds under the CSR-1 registration process.

CSR Activities Eligible for CSR Funds

Under Schedule VII of the Companies Act, 2013, eligible CSR activities include various social, environmental, and educational initiatives. Here are the main categories:

1. Education and Skill Development: Providing scholarships, setting up school infrastructure, and offering vocational training programs to improve employability.
2. Healthcare and Sanitation: Establishing medical facilities, providing medical aid, and creating clean drinking water initiatives for underserved communities.
3. Poverty Eradication: Financial aid and support for underprivileged communities to improve living standards, reduce poverty, and provide livelihood opportunities.
4. Environmental Sustainability: Promoting renewable energy projects, supporting waste management initiatives, and conducting afforestation programs to combat climate change.
5. Gender Equality and Women Empowerment: Initiatives supporting women’s rights, self-help groups, skill-building programs, and creating job opportunities for women.
6. Rural Development: Enhancing rural infrastructure, providing electrification, and supporting agriculture and allied activities to improve the livelihoods of rural populations.

Indian law, through Schedule VII, encourages businesses to focus their CSR funds on these impactful areas to promote overall development in the country.

Now that we know which activities are eligible for CSR funding, let’s explore the step-by-step guide to registering for CSR-1.

Step-by-Step Guide to CSR-1 Registration

Registering for CSR funding involves several steps. Here’s how organizations should approach the process:

Step 1: Obtain Digital Signature Certificate (DSC)

The authorized representative must obtain a Digital Signature Certificate (DSC) to sign the CSR-1 form. The DSC is an electronic signature used for official submissions and ensures data authenticity.

Step 2: Prepare the Required Documents

To ensure smooth registration, the following documents must be submitted:

• PAN card of the entity.
• Registration certificate (e.g., Trust Act, Societies Registration Act, Companies Act).
• Board members’ details.
• DSC of the authorized representative.
• Professional certification from a CA, CS, or CMA.

Step 3: Filing the CSR-1 Form Online

Visit the MCA portal and log in. Select CSR-1 registration, fill out the application form, and upload the necessary documents. The form must be submitted with the DSC of the authorized representative.

Step 4: Verification and Approval

Once the MCA receives the CSR-1 form and documents, they will verify the application. Upon approval, the CSR-1 Registration Certificate will be issued. This certificate validates the entity’s eligibility for CSR fund allocation.

VJM Global can help you handle corporate tax planning, internal audits, and cross-border transaction compliance. Our experts help align your financial reporting with accounting and taxation frameworks, minimizing legal exposure and maximizing operational efficiency.

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Also Read: Complete Restaurant Bookkeeping Guide: US to India Expansion

Now that we know how to register, let's look at the penalties for not adhering to CSR in India.

Consequences of Non-Compliance with CSR Provisions in India

For companies involved in Corporate Social Responsibility (CSR) activities, non-compliance with the CSR provisions under the Companies Act, 2013, can result in significant legal and financial consequences. Specifically, Section 135(7) of the Act stipulates penalties for failure to adhere to CSR requirements, which must be carefully navigated by foreign businesses to avoid costly fines and reputational damage.

Penalties for Non-Compliance by the Company

According to Section 135(7) of the Companies Act, if a company fails to comply with CSR provisions, it faces the following penalties:

1. Twice the Amount of Unspent CSR Funds: If the company does not transfer the mandated CSR expenditure to the designated CSR fund or the Unspent CSR Account as per Schedule VII of the Act, it will be liable for a penalty of twice the amount it was required to transfer.
2. INR 1 Crore Penalty: Alternatively, the company may face a fixed penalty of INR 1 crore for failing to comply with CSR obligations. This penalty is in addition to any other fines or legal expenses that the company might incur while resolving the issue.

This penalty structure highlights the seriousness of CSR compliance in India and underscores the importance of proper financial planning and reporting for U.S. businesses involved in CSR activities.

Penalties for Non-Compliance by Company Officers

Not only is the company itself liable, but the directors and officers in default are also subject to penalties under the same provisions. As per Section 135(7), every officer of the company who is in default shall be liable to the following penalties:

1. Penalty on Officers: 1/10th of Required CSR Funds: If the officer is found to be in default, they may be fined an amount equal to 1/10th of the CSR amount required to be transferred to the CSR fund, or a fine of INR 2 lakh, whichever is less. This ensures accountability at the individual level within the organization.
2. Legal Implications: In the event of repeated violations, further consequences may arise, including legal actions taken by regulatory bodies such as the Ministry of Corporate Affairs (MCA) or the Registrar of Companies (RoC). 

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Next, let's look at how CSR-1 registration connects with other essential government registrations in India.

CSR-1 Registration and Its Connection with Other Government Registrations

Several additional government registrations are required for businesses engaging in CSR in India:

1. Niti Aayog Registration: Businesses involved in large CSR activities must register with Niti Aayog to align with national CSR goals.
2. GeM (Government e-Marketplace): For procurement-related CSR activities, GeM registration is required to ensure transparency and proper bidding.
3. LLP Registration & CSR-1: LLPs must also complete CSR-1 registration to be eligible for CSR funding.
4. Startup India Registration: Startups that are part of Startup India can avail of CSR funding under the government’s initiative for promoting innovation.
5. IEC Registration: U.S. businesses engaged in import-export must have IEC registration to comply with Indian tax and customs regulations while executing CSR activities.

Let’s now explore some of the common challenges businesses face during CSR-1 registration and how to overcome them.

4 Common Challenges in CSR-1 Registration

While CSR-1 registration is essential for receiving CSR funds, businesses often face various hurdles during the application process. Understanding these challenges will help you overcome them effectively.

1. Documentation Issues: Missing or incorrect documents may delay the registration process.

Solution: Ensure all documents are accurate and validated by a practicing professional.

2. Name Mismatch with MCA Records: Discrepancies between your company name in the MCA database and the submitted documents can delay the process.

Solution: Cross-check business names with MCA records before submission.

3. Digital Signature Errors: DSC errors may prevent the submission of CSR-1 forms.

Solution: Verify DSC and ensure it's correctly linked to the authorized representative.

4. Delayed Approval: Approval may take longer than expected due to document verification.

Solution: Submit applications well in advance and follow up regularly with MCA.

Also Read: How to Manage Café Accounting: Owner's Guide from the US to India

The following section outlines the statutory provisions and authorities responsible for CSR oversight.

Legal Framework Governing CSR-1 Registration

The CSR-1 registration process in India is governed by specific laws and regulatory authorities to ensure transparency and compliance with corporate social responsibility guidelines.

• Companies Act, 2013: Section 135 mandates CSR obligations for certain companies, requiring them to allocate profits for social causes.
• Ministry of Corporate Affairs (MCA): Oversees CSR registration, ensuring companies comply with Indian CSR regulations and fund usage guidelines.
• Income Tax Department: Monitors CSR tax deductions, ensuring companies adhere to tax laws related to CSR spending.
• Securities and Exchange Board of India (SEBI): Ensures listed companies disclose CSR activities in annual reports, promoting transparency and accountability.
• CSR Committee: A mandatory requirement for eligible companies, the CSR Committee ensures CSR fund allocation aligns with the company’s objectives.

With the legal foundation clarified, the focus now shifts to what lies ahead in India’s CSR system. 

Future of CSR-1 Registration and CSR Funding in India

As India continues to promote CSR-driven initiatives, the CSR-1 registration process is expected to change. Here’s a look at how CSR funding may progress in the coming years.

• Simplified CSR Guidelines: The Indian government will likely simplify CSR compliance, making it more accessible for global companies to contribute to social causes.
• Increased Participation from Foreign Businesses: As U.S. companies expand into India, CSR engagement will grow, supported by streamlined registration processes.
• Enhanced Government Incentives: Future policy changes may offer increased tax deductions and incentives for companies engaging in CSR, particularly those with global operations.
• Technological Integration for Transparency: The use of blockchain and digital platforms will increase transparency and efficiency in CSR fund management.
• Alignment with Global CSR Standards: India’s CSR framework will align more closely with global standards, creating opportunities for multinational businesses to integrate CSR into their operations across borders.

Also Read: Top Bookkeeping and Accounting Practices for US Law Firms

Let's now examine how VJM Global can assist your US entity in entering India while upholding full compliance.

Ensure Smooth Compliance for Your Business Operations With VJM Global

Expanding your business comes with immense growth potential but also complex compliance obligations across taxation, auditing, and cross-border transactions. VJM Global acts as your compliance partner, helping you meet every legal and regulatory requirement with precision and confidence.

1. U.S. Business Setup & Structuring in India: VJM Global assists your company in selecting the most compliant business structure, liaison office, branch office, or subsidiary, while aligning with RBI, FEMA, and MCA norms. Our experts ensure you meet all legal and financial prerequisites from day one.

2. GST Compliance & Advisory Services: Our GST specialists manage everything from registration, audits, and refunds to strategic advisory. We conduct GST impact analysis and provide ongoing outsourcing support, allowing you to stay tax-efficient and compliant while focusing on your core business operations.

3. Audit & Assurance for Risk-Free Operations: We conduct comprehensive internal, statutory, and management audits to strengthen financial governance. Our audit framework ensures adherence to the Companies Act, 2013 and Indian Accounting Standards (Ind AS), helping businesses maintain transparency and investor trust.

4. Direct & Cross-Border Taxation Expertise: VJM Global simplifies corporate tax, transfer pricing, and withholding compliance under the relevant tax laws. Our FEMA and DTAA advisory ensures that cross-border transactions between your company branches remain tax-efficient and fully compliant.

5. Strategic Risk, Assurance & Transaction Advisory: From due diligence audits to mergers, acquisitions, and joint ventures, we guide businesses through every strategic move. Our insights help mitigate risks, maintain compliance, and ensure smooth business expansion.

At VJM Global, we go beyond compliance; we help your business operate confidently with clarity, control, and complete compliance.

Final Thoughts

Businesses must understand the applicability of the CSR-1 form for compliance and efficient engagement in corporate social responsibility activities. With proper registration and adherence to Indian CSR regulations, your company can make a significant social impact while building its reputation in India. 

VJM Global provides continuous oversight for your companies, offering statutory audits, due diligence reviews, and GST representation before tax authorities. In case your entity is setting up a subsidiary, joint venture, or branch office, we ensure full compliance with the regulatory, tax, and corporate laws, from incorporation to daily operations.

Contact VJM Global and let our experts handle every regulatory detail with precision.

FAQs

1. What is the main purpose of CSR-1 registration?

CSR-1 registration ensures that nonprofit organizations are eligible to receive CSR funds from companies in India by ensuring compliance with the Companies Act, 2013.

2. Who is eligible to apply for CSR-1 registration in India?

Only NGOs, trusts, societies, and Section 8 companies working on charitable activities are eligible for CSR-1 registration to receive CSR funding in India.

3. Can foreign entities apply for CSR-1 registration in India?

Foreign entities or U.S. businesses cannot directly apply for CSR-1 registration, but can partner with local registered NGOs to receive CSR funds in India.

4. Is CSR-1 registration mandatory for all entities receiving CSR funds?

Yes, any organization intending to receive CSR funds from Indian companies must complete CSR-1 registration as per Section 135 of the Companies Act, 2013.

5. What documents are required for CSR-1 registration?

Documents such as PAN, registration certificates, details of board members, DSC, and certification from CA/CS/CMA are required for CSR-1 registration.

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