Govt. Proposes Lower CSR Thresholds and Mandatory CSR-Experienced Director on CSR Committee

Bill No. XXXII of 2025, Dated: 08.12.2025

1. Background

The Government of India has introduced the Companies (Amendment) Bill, 2025, proposing significant amendments to Section 135 of the Companies Act, 2013, which governs Corporate Social Responsibility (CSR) obligations. The proposed changes seek to widen the CSR net and strengthen governance and expertise in CSR decision-making.

2. Lowering of CSR Applicability Thresholds

2.1 Proposed Eligibility Criteria

Under the Bill, a company will be required to comply with CSR provisions if, during the immediately preceding financial year, it meets any one of the following thresholds:

• Net Worth – ₹100 crore or more
• Turnover – ₹500 crore or more
• Net Profit – ₹3 crore or more

This represents a substantial expansion of the CSR framework to include smaller and mid-sized companies.

3. Current CSR Thresholds (Existing Law)

At present, Section 135 applies only if a company meets any of the following criteria during the immediately preceding financial year:

• Net Worth – ₹500 crore or more
• Turnover – ₹1,000 crore or more
• Net Profit – ₹5 crore or more

The existing regime does not mandate any specific experience requirement for CSR Committee members.

4. Mandatory CSR Expertise on CSR Committee

4.1 New Governance Requirement

The Bill proposes that the CSR Committee must include at least one director having extensive experience in CSR-related matters.

4.2 Objective

This requirement aims to:

• Improve quality, impact, and accountability of CSR projects
• Ensure informed decision-making in project selection, monitoring, and evaluation
• Move CSR from a compliance-driven exercise to a strategic and outcome-oriented function

This is a new statutory requirement and does not exist under the current framework.

5. Regulatory Intent

The proposed amendments seek to:

• Broaden CSR participation across a larger corporate base
• Enhance professional oversight and governance of CSR initiatives
• Improve effectiveness, credibility, and social impact of CSR spending
• Align corporate responsibility obligations with India’s developmental priorities

6. Implications for Companies

If enacted, companies should prepare to:

• Reassess CSR applicability under the revised financial thresholds
• Constitute or reconstitute CSR Committees to include a CSR-experienced director
• Build internal or external capacity for CSR strategy, implementation, and reporting
• Increase budgetary planning for CSR obligations at an earlier stage of growth

Companies newly brought within the CSR ambit will need to put systems, policies, and governance structures in place well in advance.

7. Next Steps

The Bill will be taken up for Parliamentary consideration and debate. The amendments will take effect once passed by Parliament and notified by the Government.

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