Free tool · Corporate Social Responsibility
CSR Applicability Calculator — Section 135
Three numbers decide whether section 135 applies to your company, and three more decide how much you have to spend. The tool below does both, and shows its working — including the two things that catch companies out: the profit figure is not the one in your P&L, and a company can be inside section 135 while owing nothing at all.
CSR applicability & 2% obligation calculator
Enter figures in ₹ crore. The first three decide whether section 135 applies to you at all; the next three decide how much you must spend. Everything is computed from what you enter — nothing is assumed.
1 · Immediately preceding financial year
Thresholds tested here: net worth ₹500 cr, turnover ₹1,000 cr, net profit ₹5 cr. Any one is enough.
2 · Net profit under section 198 — three preceding financial years
This is not profit after tax from your P&L. Section 198 has its own build‑up, with specific credits and deductions. Putting PAT in these boxes will give you the wrong number.
3 · Optional
Excess spent in an earlier year, carried under rule 7(3) — excluding any surplus arising out of CSR activities.
Sections 135(1), 135(5) and 135(9) of the Companies Act, 2013 and rule 7(3) of the Companies (CSR Policy) Rules, 2014. A guidance estimate, not a certified computation — the section 198 figure in particular should come from your auditor before anything is filed or spent.
Who section 135 actually catches
Under section 135(1), the provisions apply to every company with, during the immediately preceding financial year, any one of:
- net worth of ₹500 crore or more, or
- turnover of ₹1,000 crore or more, or
- net profit of ₹5 crore or more.
Any one is enough — they are alternatives, not a combined test. In practice the ₹5 crore net profit limb is the one that brings ordinary mid‑sized companies in, often in a single unusually good year.
One wording point worth knowing, because it changes which year you test. The section originally read “during any financial year”. That was substituted with “during the immediately preceding financial year” by the Companies (Amendment) Act, 2017, with effect from 19 September 2018. Several widely‑used online reproductions of section 135(1) still carry the old text, which produces a materially different answer for a company that crossed a threshold once, years ago. The calculator above applies the amended test.
Note also that the CSR Rules and the section are not drafted identically on this point, and practitioners do not treat the interaction as entirely settled. Where a company is close to a threshold in one year only, that is a question for your auditor rather than a calculator.
The section 198 trap
Section 135(5) requires spending at least 2% of the average net profits of the three immediately preceding financial years. The words “net profit” there do not mean the profit after tax on the face of your statement of profit and loss.
They mean net profit computed under section 198, which has its own build‑up — specific credits that are allowed, specific sums that are not deducted, and items excluded altogether. It is the same computation used for managerial remuneration, and it routinely produces a figure some distance from book profit.
This is the single most common error we see on CSR. Someone types profit after tax into a calculator, gets a number, and budgets against it. If you take one thing from this page, take that the section 198 figure should come from your auditor before anything is committed.
Money you do not spend — two different deadlines
Unspent CSR money does not simply roll forward. Where it goes, and by when, depends entirely on whether it relates to an ongoing project:
| Ongoing project | Not an ongoing project | |
|---|---|---|
| Where it goes | Unspent CSR Account, in a scheduled bank | A Fund specified in Schedule VII |
| By when | 30 days from the end of the financial year | 6 months from the end of the financial year |
| For a 31 March year end | 30 April | 30 September |
| What then | Spend within three financial years; anything still unspent goes to a Schedule VII Fund within 30 days of the end of the third year | Done — the amount has left the company |
The thirty‑day one is easy to miss because it falls immediately after year end, before the accounts are anywhere near finalised. Failure to transfer carries a penalty under section 135(7) of twice the amount that should have been transferred, or ₹1 crore, whichever is lower — and ROC orders on precisely this point exist, so it is not theoretical.
Committee, set-off, and when you stop being covered
The CSR Committee
Three or more directors, at least one of them independent — or two or more where the company is not required to appoint an independent director under section 149(4). But under section 135(9), where the amount to be spent does not exceed ₹50 lakh, no Committee is required at all and the Board discharges its functions. Note the wording: at exactly ₹50 lakh you are still inside the exemption.
Set-off for overspending
Spend more than you had to and, under rule 7(3) of the CSR Rules, the excess may be set off against the requirement for the immediately succeeding three financial years. Two conditions worth remembering: the excess must not include surplus arising out of the CSR activities themselves, and the facility applies from 22 January 2021 prospectively, so it is not a way to reach back into older years.
Falling back out
Coverage is not permanent. Under rule 3(2), a company that ceases to meet the section 135(1) criteria for three consecutive financial years is not required to constitute a Committee or comply with sub‑sections (2) to (5) until it meets the criteria again. One bad year does not release you; three do.
Reporting
Beyond the Board’s report, covered companies furnish a CSR report to the Registrar in e‑Form CSR‑2, which has applied from financial year 2020‑21 onwards. The form has been revised since — a revised version took effect from 14 July 2025 — so check you are filing the current one rather than a saved copy from last year.
Being honest about the audience for this page: most Ahmedabad companies we work with are nowhere near ₹500 crore of net worth or ₹1,000 crore of turnover. The limb that matters locally is ₹5 crore of net profit, and the companies it catches are usually surprised by it. If that is you, the calculator above is a starting point and not a substitute for getting the section 198 number computed properly.
FAQ
Does CSR apply to an LLP?
No. Section 135 sits in the Companies Act, 2013 and applies to companies. An LLP is governed by the Limited Liability Partnership Act, 2008 and is outside it, however large it gets. Proposals to extend CSR to LLPs have been discussed but are not law.
We are covered but made losses. Do we still have to spend?
If the three‑year average net profit is not positive, 2% of it produces no amount to spend. But the company remains covered by section 135 on whichever limb brought it in — the Board‑level obligations and reporting do not switch off because the computed figure is nil. Applicability and the spending amount are two separate questions, and conflating them is a frequent error.
Is net profit here the same as profit after tax?
No, and this is the most common mistake on the subject. The figure is net profit computed under section 198, which has its own prescribed build‑up and generally differs from book profit or PAT. Use your auditor’s computation, not the bottom line of the P&L.
We crossed ₹5 crore profit once, three years ago. Are we still covered?
The test is the immediately preceding financial year, following the 2017 amendment effective 19 September 2018. Separately, rule 3(2) releases a company that has ceased to meet the criteria for three consecutive financial years. Older online reproductions of the section still say “any financial year”, which is why this question comes up so often.
Do we need a CSR Committee?
Only if the amount to be spent exceeds ₹50 lakh. At or below that figure, section 135(9) removes the requirement and the Board discharges the Committee’s functions itself. For most companies caught by the ₹5 crore profit limb, the amount lands well under ₹50 lakh and no Committee is needed.
What if the company has not completed three financial years?
The calculator deliberately declines to compute this rather than guess. The treatment differs from the ordinary three‑year average and is worth confirming with your auditor for your specific facts.
Related
- Company Annual Compliance — what is due and when
- Annual Compliance Checklist — AOC‑4 and MGT‑7A
- SH‑7 Stamp Duty & MCA Fee Finder
- Private Limited Company Registration in Ahmedabad
Sources: Companies Act, 2013 — section 135, in particular 135(1) as amended by the Companies (Amendment) Act, 2017 w.e.f. 19.09.2018, the second proviso to 135(5), and sub-sections 135(6), 135(7) and 135(9); section 198 for the computation of net profit; Companies (Corporate Social Responsibility Policy) Rules, 2014, rules 3(2) and 7(3); e-Form CSR-2 as revised with effect from 14 July 2025. Reviewed 22 September 2026. Guidance, not legal or audit advice — the section 198 computation should come from your auditor.