General Circular No. 21/2014 No. 05/01/2014- CSR Government of India Ministry of Corporate Affairs 5 th Floor, ‘A’ Wing,  Shastri Bhawan, Dr. R. P. Marg New Delhi - 110 001  Dated: 18th June, 2014 To, All Regional Director, All Registrar of Companies, All Stakeholders Subject: - Clarifications with regard to provisions of Corporate Social Responsibility under  section 135 of the Companies Act, 2013. Sir, This Ministry has received several references and representation from stakeholders seeking clarifications on the provisions under Section 135 of the Companies Act, 2013 (herein  after referred as ‘the Act’) and the Companies (Corporate Social Responsibility Policy) Rules,  2014, as well as activities to be undertaken as per Schedule VII of the Companies Act, 2013.  Clarifications with respect to representations received in the Ministry on Corporate Social  Responsibility (herein after referred as (‘CSR’) are as under:- (i) The statutory provision and provisions of CSR Rules, 2014, is to ensure that while  activities undertaken in pursuance of the CSR policy must be relatable to Schedule VII of the Companies Act 2013, the entries in the said Schedule VII must be interpreted  liberally so as to capture the essence of the subjects enumerated in the said  Schedule. The items enlisted in the amended Schedule VII of the Act, are broad-based  and are intended to cover a wide range of activities as illustratively mentioned in the  Annexure. Contd….-2- (ii) It is further clarified that CSR activities should be undertaken by the companies in  project/ programme mode [as referred in Rule 4 (1) of Companies CSR Rules, 2014].  One-off events such as marathons/ awards/ charitable contribution/ advertisement/ sponsorships of TV programmes etc. would not be qualified as part of CSR  expenditure. (iii) Expenses incurred by companies for the fulfillment of any Act/ Statute of regulations (such as Labour Laws, Land Acquisition Act etc.) would not count as CSR expenditure  under the Companies Act. (iv) Salaries paid by the companies to regular CSR staff as well as to volunteers of the  companies (in proportion to company’s time/hours spent specifically on CSR) can be  factored into CSR project cost as part of the CSR expenditure. (v) “Any financial year” referred under Sub-Section (1) of Section 135 of the Act read with  Rule 3(2) of Companies CSR Rule, 2014, implies ‘any of the three preceding financial  years’. (vi) Expenditure incurred by Foreign Holding Company for CSR activities in India will  qualify as CSR spend of the Indian subsidiary if, the CSR expenditures are routed  through Indian subsidiaries and if the Indian subsidiary is required to do so as per  section 135 of the Act. (vii) ‘Registered Trust’ (as referred in Rule 4(2) of the Companies CSR Rules, 2014) would  include Trusts registered under Income Tax Act 1956, for those States where  registration of Trust is not mandatory. Contd….-3- (viii) Contribution to Corpus of a Trust/ society/ section 8 companies etc. will qualify as CSR  expenditure as long as (a) the Trust/ society/ section 8 companies etc. is created  exclusively for undertaking CSR activities or (b) where the corpus is created  exclusively for a purpose directly relatable to a subject covered in Schedule VII of the  Act. 2. This issues with the approval of Competent Authority. Yours faithfully,  Sd/- (Seema Rath) Assistant Director (CSR)  Phone No. 23389622 Copy to: 1. PSO to Secretary  2. PPS to Additional Secretary  3. PS to DG (IICA)/JS (M) /JS(B)/JS(SP)/DII (UCN)/EA/DII(POLICY) 4. DIR (AK)/DIR (AB)/DIR(NC)/DIR(PS) 5. e-Governance Cell for uploading on website of MCAAnnexure referred to at para (i) of General Circular No. 21/2014 dated 18.06.2014 SI.  No. Additional items requested to be included in  Schedule VII or to be clarified as already  being covered under Schedule VII of the Act Whether covered under Schedule VII of the  Act 1. Promotion of Road Safety through CSR:  (i) (a) Promotions of Education,  “Educating the Masses and Promotion  of Road Safety awareness in all facets  of road usage, (b) Drivers’ training,  (c) Training to enforcement personnel, (d) Safety traffic engineering and  awareness through print, audio and  visual media” should be included. (ii) Social Business Projects : “giving medical and Legal aid,  treatment to road accident victims”  should be included.  (a) Schedule VII (ii) under “promoting  education”. (b) For drivers training etc. Schedule VII (ii)  under “vocational skills”. (c) It is establishment functions of  Government (cannot be covered). (d) Schedule VII (ii) under “promoting  education”. (ii) Schedule VII (i) under ‘promoting health care  including preventive health care.’ 2.    Provisions for aids and appliances to the differently- able persons - ‘Request for inclusion  Schedule VII (i) under ‘promoting health care  including preventive health care.’ 3. The company contemplates of setting up  ARTIIC (Applied Research Training and  Innovation Centre) at Nasik. Centre will cover the  following aspects as CSR initiatives for the benefit  of the predominately rural farming community: (a) Capacity building for farmers covering  best sustainable farm management  practices. (b) Training Agriculture Labour on skill  development. Item no. (ii) of Schedule VII under the head of  “promoting education” and “vocational skills”  and “rural development”. (a) “Vocational skill” livelihood enhancement  projects. (b) “Vocational skill”(c) Doing our own research on the field for  individual crops to find out the most cost  optimum and Agri – ecological  sustainable farm practices. (Applied  research) with a focus on water  management. (d) To do Product Life Cycle analysis from the  soil conservation point of view. (c) ‘Ecological balance’, ‘maintaining quality of  soil, air and water’. (d) “Conservation of natural resource” and  ‘maintaining quality of soil, air and water’. 4. To make “Consumer Protection Services”  eligible under CSR. (Reference received by Dr.  V.G. Patel, Chairman of Consumer Education and  Research Centre). (i) Providing effective consumer  grievance redressal mechanism. (ii) Protecting consumer’s health and  safety, sustainable consumption,  consumer service, support and  complaint resolution. (iii) Consumer protection activities.  (iv) Consumer Rights to be mandated. (v) all consumer protection programs and  activities” on the same lines as Rural  Development, Education etc.  Consumer education and awareness can be  covered under Schedule VII (ii) “promoting  education”. 5. a) Donations to IIM [A] for conservation of  buildings and renovation of classrooms  would qualify as “promoting education” and  hence eligible for compliance of  companies with Corporate Social  Responsibility. b) Donations to IIMA for conservation of  buildings and renovation of classrooms  would qualify as “protection of national  heritage, art and culture, including  restoration of buildings and sites of  historical importance” and hence eligible  for compliance of companies with CSR. Conservation and renovation of school  buildings and classrooms relates to CSR  activities under Schedule VII as “promoting  education”. 6. Non Academic Technopark TBI not located  within an academic Institution but approved and  supported by Department of Science and  Technology.  Schedule VII (ii) under “promoting education”, if  approved by Department of Science and  Technology. 7. Disaster Relief Disaster relief can cover wide range of  activities that can be appropriately shown under  various items listed in Schedule VII. For  example, (i) medical aid can be covered under  ‘promoting health care including  preventive health care.’ (ii) food supply can be covered under  eradicating hunger, poverty and  malnutrition. (iii) supply of clean water can be covered  under ‘sanitation and making  available safe drinking water’. 8. Trauma care around highways in case of road  accidents. Under ‘health care’. 9. Clarity on "rural development projects” Any project meant for the development of rural  India will be covered under this. 10. Supplementing of Govt. schemes like mid-day  meal by corporates through additional nutrition  would qualify under Schedule VII. Yes. Under Schedule VII, item no. (i) under  ‘poverty and malnutrition’. 11. Research and Studies in the areas specified in  Schedule VII. Yes, under the respective areas of items  defined in Schedule VII. Otherwise under  ‘promoting education’. 12. Capacity building of government officials and  elected representatives – both in the area of PPPs  and urban infrastructure. No.13. Sustainable urban development and urban  public transport systems  Not covered. 14. Enabling access to, or improving the delivery of,  public health systems be considered under the  head “preventive healthcare” or “measures for  reducing inequalities faced by socially &  economically backward groups”?  Can be covered under both the heads of  “healthcare” or “measures for reducing  inequalities faced by socially & economically  backward groups”, depending on the context. 15. Likewise, could slum re-development or EWS  housing be covered under “measures for reducing  inequalities faced by socially & economically  backward groups”?  Yes. 16. Renewable energy projects  Under ‘Environmental sustainability, ecological  balance and conservation of natural resources’, 17. (i) Are the initiatives mentioned in  Schedule VII exhaustive?  (ii) In case a company wants to undertake  initiatives for the beneficiaries  mentioned in Schedule VII, but the  activity is not included in Schedule VII,  then will it count (as per 2(c)(ii) of the  Final Rules, they will count)?  (i) & (ii) Schedule VII is to be liberally  interpreted so as to capture the essence of  subjects enumerated in the schedule. 18. US-India Physicians Exchange Program – broadly speaking, this would be program that  provides for the professional exchange of  physicians between India and the United States.   No. ****************************