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CSR Section 135 Calculator.

Check Section 135 applicability, compute the 2% of average net profit obligation, and identify unspent CSR amounts that require transfer to a Schedule VII Fund or special account.

Inputs (₹ in crore)
Net worth
Threshold: ₹500 cr or more
Turnover
Threshold: ₹1000 cr or more
Net profit — current year (Sec 198 basis)
Threshold: ₹5 cr or more
Net profit — preceding year
Net profit — 2nd preceding year
Actual CSR spend this year
Is the unspent amount an ongoing project?
Result
Section 135 applies?✓ Yes
Average net profit (3 yrs)₹10.00 cr
CSR obligation (2%)₹0.20 cr
Actual spend₹5.00 cr
Unspent amount₹0.00 cr
CSR Committee required?✗ No — below ₹50 lakh

How Section 135 CSR works.

Section 135 of the Companies Act 2013 requires every company meeting any one of three thresholds to spend at least 2% of average net profits (computed per Section 198) of the immediately preceding three financial years on Corporate Social Responsibility activities. Unspent amounts have a binary treatment: ongoing projects get 3 more years (special unspent account), non-ongoing spend gets transferred to a Schedule VII fund within 6 months.

Auditor reporting under CARO 2020 clause (xx) requires explicit confirmation on both transfers.

On CORAA
CSR audit-evidence collection runs through CORAA’s Reporting hub — CARO clause (xx) automation, unspent CSR transfer detection, Form CSR-2 trail to MCA.
CARO 2020 applicability checkMore calculators

How CSR under Section 135 works

Section 135 of the Companies Act 2013 mandates Corporate Social Responsibility (CSR) spending by companies meeting any one of three thresholds in the immediately preceding financial year: (a) net worth of ₹500 crore or more, (b) turnover of ₹1,000 crore or more, or (c) net profit of ₹5 crore or more. Once triggered, the company must constitute a CSR Committee, formulate a CSR Policy, and spend at least 2% of average net profits of the immediately preceding three financial years on activities listed in Schedule VII.

The 2021 amendment moved CSR from "comply or explain" to "comply or transfer". Unspent CSR allocated to ongoing projects must be transferred to a dedicated "Unspent CSR Account" within 30 days of FY end and spent within three financial years. Unspent CSR NOT allocated to ongoing projects must be transferred within 6 months to a Schedule VII fund (PM CARES, PM National Relief Fund, Clean Ganga Fund, etc.).

The CSR Committee must comprise three or more directors with at least one independent director, except for companies not required to appoint independent directors — they need only two directors. The CSR Policy is approved by the Board on the Committee's recommendation. The Board's Report must include an Annexure (Form CSR-1 / CSR-2) with the prescribed details.

Worked example — mid-cap entity triggering CSR

A company has net worth ₹600 Cr, turnover ₹450 Cr, and net profit ₹8 Cr in FY 2025-26. Average net profit for the preceding three years (₹5 Cr + ₹6 Cr + ₹8 Cr) = ₹6.33 Cr.

Inputs
Net worth threshold≥ ₹500 Cr — triggered
Turnover threshold< ₹1,000 Cr — not triggered
Net profit threshold≥ ₹5 Cr — triggered
Average net profit (3 years)₹6.33 Cr
Output
CSR applicabilityYes (net worth + net profit)
CSR obligation (2%)₹12.67 L
CSR CommitteeMandatory (3+ directors)
Board's Report AnnexureCSR-2 disclosure
Both the net-worth and net-profit triggers are crossed. CSR obligation is 2% × ₹6.33 Cr = ₹12.67 L. If less than ₹50 lakh per year, the CSR Committee requirement does not apply (Section 135 proviso post 2021 amendment) — but the spend obligation still holds. Disclosure in Board's Report under CSR-2.

Common mistakes

Computing net profit per Section 198 not Section 2(40)
For Section 135, "net profit" is computed under Section 198 of the Companies Act — which adjusts P&L for items like profit on capital sales, premium on shares, profit on revaluation, etc. It is NOT the accounting profit. Many companies wrongly use accounting profit and understate / overstate CSR obligation.
Missing the ongoing-project vs other unspent split
Unspent CSR allocated to an ongoing project: transfer to a separate dedicated bank account within 30 days of FY end, spend within 3 years. Unspent CSR not allocated to an ongoing project: transfer within 6 months to a Schedule VII fund. Failing to make the distinction triggers Section 135(7) penalty.
Treating administrative overheads beyond 5%
CSR rules cap administrative overheads at 5% of total CSR expenditure (Rule 7(1) of Companies (CSR Policy) Rules 2014). Salaries of CSR team, training, capacity building, monitoring expenses count here.
Excess spend not carried forward
If a company spends more than 2%, the excess can be set off against the CSR requirement for up to the immediately succeeding three financial years (Rule 7(3)) — but the board resolution must specifically authorize this and the set-off must be reflected in the next year's CSR report.
Forgetting CSR-2 disclosure annexure
CSR-2 was made mandatory from FY 2020-21 for ALL companies meeting Section 135 thresholds — to be filed separately from the financial statements on MCA portal. The deadline is typically 31 March following the FY end. Auditors should verify CSR-2 filing as part of CARO 2020 clause (vii).

Frequently asked questions

What is the CSR threshold under Section 135?+
Any company that, in the immediately preceding financial year, has (a) net worth ≥ ₹500 crore, OR (b) turnover ≥ ₹1,000 crore, OR (c) net profit ≥ ₹5 crore. Any one of the three triggers makes CSR mandatory.
How is "net profit" computed for Section 135?+
Section 135 net profit is computed under Section 198 of the Companies Act 2013 — accounting profit adjusted for: profit from capital nature transactions (add); profit by way of premium on shares or debentures (subtract); profit on revaluation of assets (subtract); compensation received under restricted Acts (subtract); etc. It is NOT the accounting profit shown in the P&L.
What is the 2% CSR obligation?+
A qualifying company must spend at least 2% of the average net profits of the immediately preceding three financial years (computed under Section 198) on activities listed in Schedule VII. If the company has not completed three financial years, the average is taken for the years available.
What happens to unspent CSR?+
Two routes. Unspent CSR allocated to an ongoing project → transfer to a separate "Unspent CSR Account" in a scheduled bank within 30 days of FY end, spend within 3 years, transfer balance to Schedule VII fund. Unspent CSR not allocated to ongoing project → transfer within 6 months of FY end to a Schedule VII fund (PM CARES, PM Relief, Clean Ganga, etc.).
What are the penalties under Section 135(7)?+
Failure to spend or transfer attracts a penalty on the company equal to twice the amount required to be transferred / spent, OR ₹1 crore, whichever is less. Every officer in default is liable to a penalty of one-tenth of the amount required to be transferred / spent, OR ₹2 lakh, whichever is less.
Is CSR contribution tax deductible?+
No — Section 37 Explanation 2 of the Income Tax Act 1961 specifically denies deduction for CSR expenditure as it is not "expenditure incurred wholly and exclusively for the purposes of business". However, specific contributions to certain Schedule VII funds (PM Relief, PM CARES, etc.) may be allowable under Section 80G separately.
What activities qualify under Schedule VII?+
Schedule VII covers: eradicating hunger and poverty; promoting healthcare and sanitation; education; gender equality and women empowerment; environmental sustainability; protection of national heritage; armed forces / war widows; sports training; PM CARES / National Relief Fund / Clean Ganga; technology incubators in approved institutions; rural development; slum area development; disaster management.
Does CARO 2020 require reporting on CSR?+
Yes. CARO 2020 clause (xx) requires the auditor to report (a) whether unspent CSR has been transferred to a fund specified in Schedule VII within six months of the expiry of the financial year, and (b) whether unspent CSR for an ongoing project has been transferred to a special account.

Authoritative sources

Section 135 + Companies (CSR Policy) Rules 2014 — Read alongside Schedule VII (eligible CSR activities) and Section 198 (net profit computation). 2021 amendment significantly tightened the regime.
Always confirm against the latest version of the source. Regulations evolve and amendments are common.
Related calculators
Section 197 Remuneration →Section 188 RPT →CARO clause (xx) — CSR →CSR report template →
Last reviewed: 2026-05-28 · For informational purposes only — not professional advice.