MCA CSR Policy Amendment May 2026: Mandatory CSR-1 Filing Changes

The Ministry of Corporate Affairs (MCA) notified G.S.R. 389(E) on 14 May 2026, amending the Companies (Corporate Social Responsibility Policy) Rules, 2014 under Section 135 of the Companies Act, 2013 (Act No. 18 of 2013). The amendment changes how companies approach CSR-1 filing, project impact assessments, and unspent CSR transfers. If your company crossed the ₹10 crore net profit threshold for FY 2025-26, or if you run an NGO registered as a CSR implementing agency, this notification rewrites parts of your compliance calendar. The three headline changes: CSR-1 registration is now annual instead of one-time under Rule 4(2), impact assessments kick in at ₹1 crore project outlays instead of ₹10 crore under Rule 8(3), and unspent CSR funds must move to the designated account within 30 days under Section 135(6), not six months. That last one alone will force finance teams to close CSR books far faster than they are used to. This article covers the full scope of the May 2026 amendment: what changed, who is affected, penalty calculations with worked examples, compliance deadlines for FY 2026-27, and action items for both CSR-spending companies and implementing agencies.

What is CSR Under Section 135 of the Companies Act, 2013?

Corporate Social Responsibility (CSR) is the mandatory obligation under Section 135(1) of the Companies Act, 2013 (Act No. 18 of 2013) requiring qualifying companies to spend at least 2% of their average net profits on social welfare activities listed in Schedule VII. It is administered by the Ministry of Corporate Affairs (MCA) through the MCA portal and the dedicated CSR portal at csr.gov.in. The operational rules are codified in the Companies (Corporate Social Responsibility Policy) Rules, 2014, issued under MCA Notification G.S.R. 129(E) dated 27 February 2014, and subsequently amended in 2021 and now in May 2026.

CSR was introduced as a voluntary measure in the original Companies Act framework, but the 2013 Act made it mandatory for companies crossing specific financial thresholds. The concept is straightforward: large, profitable companies should direct a fraction of their earnings toward social impact. What makes CSR compliance tricky is not the spending itself, but the documentation, committee approvals, impact assessments, and filing deadlines that surround it. A company that writes a cheque to an NGO on 31 March and calls it CSR is doing it wrong. The Act requires a structured process: a board-approved CSR policy under Section 135(3), a CSR Committee under Section 135(1), spending on Schedule VII activities under Section 135(5), transfer of unspent amounts under Section 135(6), and annual reporting to the RoC. The May 2026 amendment tightens each of these steps further.

What Changed in the MCA CSR Policy Amendment May 2026

The May 2026 amendment restructures six key areas of CSR compliance. The changes are not cosmetic. They affect the filing calendar, financial planning, and operational workflow of both the companies spending on CSR and the agencies implementing CSR projects. Here is a side-by-side breakdown of what shifted.

The pattern across every row in that table is clear: shorter deadlines, more frequent reporting, and steeper penalties. The MCA is shifting CSR from an annual compliance exercise to a year-round governance responsibility. Companies that treated CSR as a March-end activity will feel this most sharply.

One change that deserves special attention is the DARPAN ID annual verification. Previously, an implementing agency could register on CSR-1 once, share its registration number with corporate partners, and continue receiving CSR funds for years without any portal activity. That is no longer possible. Every implementing agency must now log in to the MCA portal, re-verify its DARPAN Unique ID, upload fresh project data, and submit a renewed CSR-1 form each year. If the agency misses the 30 June deadline, its CSR-1 registration lapses, and any company that transfers CSR funds to a lapsed agency risks a penalty for using an unregistered entity. The practical consequence: corporate CSR teams need to maintain a live tracker of their implementing partners' CSR-1 status, not just a one-time vendor verification.

CSR Applicability: Which Companies Are Covered?

The CSR threshold increase to ₹10 crore net profit under the Corporate Laws Bill 2026 is the most significant change to the applicability criteria since CSR became mandatory in 2014. It narrows the pool of CSR-obligated companies by removing businesses in the ₹5 crore to ₹10 crore net profit band. But the other two criteria remain untouched.

CSR Applicability Criteria for FY 2026-27

A company must comply with Section 135(1) if it meets any one of the following conditions in the immediately preceding financial year:

• Net worth of ₹500 crore or more
• Turnover of ₹1,000 crore or more
• Net profit of ₹10 crore or more (revised from ₹5 crore)

The net profit calculation follows Section 198 of the Companies Act, 2013, which uses profit before tax (PBT) with adjustments specified in Rule 2(1)(h) of the Companies (CSR Policy) Rules, 2014. This is not the same as the net profit in your income tax return. Common adjustments include excluding capital profits, profits from the sale of undertakings, and any sums received by way of insurance. If you are unsure whether your company crosses the threshold, run the Section 198 calculation, not the P&L bottom line.

One important nuance: a company that ceases to meet the criteria does not get an immediate exit. Under Rule 3(2) of the Companies (CSR Policy) Rules, 2014, the company must fail to meet all three thresholds for 3 consecutive financial years before CSR obligations drop away. So a company that earned ₹11 crore in FY 2024-25 but only ₹8 crore in FY 2025-26 still has CSR obligations for FY 2026-27.

If you are unsure whether the revised ₹10 crore threshold applies to your company, a compliance health check can help identify your CSR filing obligations for the current financial year.

CSR-1 Filing Process: Step-by-Step After the May 2026 Amendment

CSR-1 is the registration form under Rule 4(1) of the Companies (CSR Policy) Rules, 2014 that implementing agencies (NGOs, trusts, societies, and Section 8 companies) must file on the MCA portal to receive CSR funds from eligible companies. Before the amendment, this was a one-time process under Rule 4(2) (original). Now, under Rule 4(2) (amended by G.S.R. 389(E)), it is annual. Here is the updated filing workflow.

1. Obtain DARPAN Unique ID: Register on the NGO DARPAN portal and obtain your Unique ID. This is a prerequisite; CSR-1 will not process without it. If your DARPAN registration expired, renew it first.
2. Log in to MCA21 V3 Portal: Access the portal at mca.gov.in. New agencies must create a Business User account. Existing agencies log in with their registered credentials.
3. Select Form CSR-1: Navigate to eForms, select CSR-1, and choose whether this is a first-time registration or annual renewal.
4. Enter Entity Details: Fill in the entity name, CIN/registration number, registered address, governing law (Societies Registration Act, Trust Act, or Companies Act Section 8), and DARPAN Unique ID.
5. Upload Project Portfolio: For renewals, attach a summary of CSR projects executed in the preceding year, amounts received, amounts spent, and beneficiary details. New agencies provide their proposed project areas mapped to Schedule VII clauses.
6. Attach Supporting Documents: Upload the entity's registration certificate, PAN card, audited financial statements for the last financial year, and a board resolution authorising CSR-1 filing.
7. Verify and Submit with DSC: Review all fields, verify the DARPAN ID linkage, and submit the form using the authorised signatory's Digital Signature Certificate (DSC).
8. Receive CSR-1 Registration Number: On successful processing, the MCA portal generates a unique CSR-1 Registration Number valid for 1 year. Share this number with partner companies for their CSR-2 filings.

For NGOs and trusts looking to receive CSR funding, our detailed guide on how to apply for CSR funding as an NGO covers the full process from DARPAN registration through project proposal preparation.

Penalty Structure for CSR Non-Compliance

The penalty framework for CSR violations sits under Section 135(7) of the Companies Act, 2013. The May 2026 amendment adds a new penalty layer for late CSR-1 renewal, but the existing penalty structure for non-spending and non-transfer remains unchanged. Here is the full breakdown.

The imprisonment provision under Section 135(7) makes CSR compliance a criminal matter, not just a civil penalty. Directors who authorise non-compliance or sign off on inaccurate CSR reporting face personal liability. This is not a theoretical risk; the MCA has initiated prosecution proceedings in multiple cases since 2022.

For companies that need professional assistance with CSR policy drafting, Form CSR-2 filing, or annual RoC compliance, corporate compliance services are available. Professional charges start at ₹9,999; government filing fees are charged separately at actuals.

Timeline and Compliance Deadlines for FY 2026-27

With the May 2026 amendment, the CSR compliance calendar has more checkpoints than before. Missing one deadline often triggers a cascade, because Form CSR-2 filing depends on CSR Committee approval, which depends on impact assessments, which depend on project completion reports. Here is the compliance timeline for FY 2026-27.

• Before 1 April 2026: CSR Committee approves the annual CSR action plan for FY 2026-27
• 30 April 2026: Transfer unspent CSR amounts from FY 2025-26 to the Unspent CSR Account under Section 135(6) (30-day deadline)
• 30 June 2026: Implementing agencies renew CSR-1 registration on the MCA portal under Rule 4(2) (amended)
• 30 June 2026: First quarterly CSR Committee review of project spending for Q1
• 30 September 2026: Q2 CSR Committee spending review
• 31 December 2026: Q3 CSR Committee spending review
• 31 March 2027: Financial year ends; close CSR spending books; file Form CSR-2 for FY 2026-27
• 30 April 2027: Transfer any unspent CSR amount from FY 2026-27
• Within 90 days of project completion: File impact assessment reports for projects of ₹1 crore or more under Rule 8(3) (amended)

That is 8 to 10 distinct compliance actions in a single financial year, compared to 3 to 4 under the old framework. Companies that relied on a single annual CSR review in February or March need to rethink their approach. For a broader view of all RoC compliance deadlines for 2026-27, the full calendar covers every filing that intersects with CSR reporting.

Impact on Different Company Types

The May 2026 CSR amendment does not apply equally to every company type. The operating impact varies by structure, size, and whether the entity is a CSR spender or a CSR implementing agency. Here is how each type is affected.

Private Limited Companies

Private Limited Companies form the largest group of CSR-applicable companies in India. For a Pvt Ltd company crossing the ₹10 crore net profit threshold, the key changes are the 30-day unspent transfer deadline and the ₹1 crore impact assessment trigger. Pvt Ltd companies with CSR obligations below ₹50 lakh are exempt from forming a CSR Committee, but they still must file Form CSR-2 and comply with the transfer timeline. The quarterly committee review, where applicable, adds 4 board-level discussions per year that many Pvt Ltd companies did not have before.

Public Limited Companies

Listed public companies already have stronger governance structures, so the quarterly CSR Committee review aligns with their existing board meeting cadence. The bigger impact is on the impact assessment threshold change. Large-cap companies often run 15 to 20 CSR projects simultaneously, and many fall in the ₹1 crore to ₹10 crore range. Each of these now requires an independent assessment, which means more vendor contracts, more reports, and more committee time. Listed companies must also disclose CSR details in their Business Responsibility and Sustainability Report (BRSR) under SEBI regulations, creating a double-reporting requirement.

Section 8 Companies (as Implementing Agencies)

Section 8 companies operating as CSR implementing agencies face the heaviest compliance burden from the annual CSR-1 renewal. Many Section 8 entities received their CSR-1 registration in 2021-22 when the form was introduced, and they have not filed since. Every one of them must now renew by 30 June 2026 or lose the ability to receive CSR funds. For Section 8 companies that are themselves CSR-applicable (yes, non-profit companies can cross the ₹10 crore threshold through programme income or investment returns), they face obligations on both sides: as spenders and as receivers.

NGOs and Trusts

NGOs registered under the Societies Registration Act and trusts under various state Trust Acts are affected only as implementing agencies. The annual CSR-1 renewal, DARPAN ID verification, and project portfolio reporting apply to them. For NGOs looking to enter the CSR funding ecosystem, the guide to CSR funding for NGOs in 2026 covers Schedule VII listing and the application process. Trusts registered under NGO registration pathways must ensure their trust deed objectives align with at least one Schedule VII activity.

For annual compliance filings including CSR-2, AOC-4 (annual financial statements under Section 137), MGT-7/MGT-7A (annual return under Section 92), and DIR-3 KYC (director KYC under Rule 12A of Companies (Appointment and Qualification of Directors) Rules, 2014), professional assistance is available through corporate compliance services. Professional charges vary by company type and filing complexity.

CSR Committee Requirements After May 2026

The CSR Committee sits at the centre of a company's CSR governance. The May 2026 amendment increases its meeting frequency and reporting responsibilities. Here is what the committee structure looks like under the revised rules.

Committee Composition

• Listed Public Companies: Minimum 3 directors, of which at least 1 must be an independent director
• Unlisted Public Companies: Minimum 3 directors, with 1 independent director (unless exempt under Section 149(4))
• Private Limited Companies: Minimum 2 directors
• Exemption: Companies with CSR spending obligation below ₹50 lakh need not form a CSR Committee. The Board of Directors discharges CSR functions directly under Section 135(9) read with Rule 3(1).

Revised Committee Responsibilities

Post-amendment, the CSR Committee must:

1. Formulate and recommend the CSR Policy to the Board under Section 135(3)(a), specifying activities from Schedule VII
2. Approve the annual CSR action plan before 1 April of each financial year under Rule 5(2)
3. Recommend the CSR expenditure amount to the Board under Section 135(3)(b)
4. Conduct quarterly reviews of project-wise CSR spending under Rule 5(2) (amended)
5. Review impact assessment reports for projects above ₹1 crore under Rule 8(3) (amended)
6. Monitor the 30-day transfer of unspent amounts to the Unspent CSR Account under Section 135(6)
7. Oversee CSR-1 status of implementing agencies used by the company under Rule 4(2) (amended)

The quarterly review is the new operational burden. Before this amendment, most CSR Committees met once a year, reviewed the CSR policy, and signed off on the annual report disclosure. Now, the committee needs quarterly data on every active project. That requires a reporting infrastructure that feeds spending data from implementing agencies back to the company's CSR Committee on a rolling basis.

What does a quarterly CSR review actually involve? The committee should receive a report covering: total CSR obligation for the year, amount spent to date, project-wise breakdown against the approved action plan, status of impact assessments for projects above ₹1 crore, and any changes in implementing agency CSR-1 status. Board minutes must record the committee's observations and any corrective actions recommended. For companies running CSR programmes through 3 to 5 implementing agencies across multiple states, this is a significant data collection exercise. The investment in a structured reporting template at the start of the financial year saves hours of scramble before each quarterly meeting. Companies already maintaining annual compliance calendars should extend those to include quarterly CSR review dates.

Schedule VII Activities: What Qualifies as CSR Spending

Schedule VII of the Companies Act, 2013 (as last amended by the Companies (Amendment) Act, 2020) defines the categories of permissible CSR activities. The May 2026 amendment does not change the list, but it requires companies to map every CSR project to a specific Schedule VII clause in Form CSR-2. Vague classifications like "community development" without a clause reference will no longer pass RoC scrutiny. (Source: Schedule VII, Companies Act, 2013)

The approved activity categories under Schedule VII include:

• Clause (i): Eradicating hunger, poverty, and malnutrition; promoting health care and sanitation
• Clause (ii): Promoting education, including special education and employment-enhancing vocational skills
• Clause (iii): Promoting gender equality, women's economic participation, and setting up homes for women and orphans
• Clause (iv): Ensuring environmental sustainability, ecological balance, conservation of natural resources
• Clause (v): Protection of national heritage, art, and culture
• Clause (vi): Measures for the benefit of armed forces veterans, war widows, and their dependents
• Clause (vii): Training to promote rural sports, nationally recognised sports, and Paralympic sports
• Clause (viii): Contributions to PM National Relief Fund, PM CARES Fund, or any fund set up by the Central Government for specific relief
• Clause (ix): Contributions to technology incubators in academic institutions approved by the Central Government
• Clause (x): Rural development projects
• Clause (xi): Slum area development
• Clause (xii): Disaster management, including relief, rehabilitation, and reconstruction activities

A frequent compliance mistake is spending on employee welfare programmes and booking it as CSR. Employee-directed activities (other than those targeting differently-abled employees or employees from marginalised communities under a specific Schedule VII clause) do not qualify. Similarly, political contributions, sponsorships with brand visibility, and activities undertaken outside India (except training Indian sports athletes) are excluded. Business expenditure disguised as CSR, such as marketing events with a charitable wrapper or training programmes that primarily benefit the company's workforce, will be flagged during RoC scrutiny and may trigger the full penalty under Section 135(7). For detailed guidance on CSR compliance rules after the threshold change, the April 2026 analysis covers overlapping requirements.

How to Register on the CSR-1 Portal as an Implementing Agency

If your NGO, trust, or Section 8 company wants to receive CSR funding from corporate partners, CSR-1 registration on the MCA portal is mandatory. Without a valid CSR-1 registration number, companies cannot route CSR funds to your entity. After the May 2026 amendment, the registration must be renewed annually.

Eligibility for CSR-1 Registration

• Entity must be registered under the Societies Registration Act, 1860, the Indian Trusts Act, 1882, or Section 8 of the Companies Act, 2013
• Entity must have a valid DARPAN Unique ID from ngodarpan.gov.in
• The entity's objects must align with at least one activity listed in Schedule VII
• The entity must have been in existence for at least 3 years at the time of first-time registration
• Audited financial statements for the preceding financial year must be available

Documents Required for CSR-1 Filing

• Registration certificate (Society registration, Trust deed, or Section 8 incorporation certificate)
• PAN card of the entity
• Memorandum of Association / Trust deed / Rules and Regulations
• DARPAN registration certificate with Unique ID
• Audited financial statements for the last financial year
• Board resolution or governing body resolution authorising CSR-1 filing
• DSC (Digital Signature Certificate) of the authorised signatory
• Project summary for the preceding year (for renewals)

For NGOs and trusts that need assistance with NGO registration, DARPAN registration, or CSR-1 filing, professional assistance is available starting at ₹4,999 as professional charges. Government fees are charged separately.

Common CSR Compliance Mistakes to Avoid

After processing hundreds of CSR-related compliance filings, certain mistakes appear repeatedly. These are not edge cases; they are patterns that trip up companies every year. The May 2026 amendment makes each of these mistakes more expensive. (Source: Companies Act, 2013 — Section 135; Companies (CSR Policy) Rules, 2014 as amended by G.S.R. 389(E).)

1. Treating CSR-1 as a one-time filing: The most immediate risk post-amendment. Implementing agencies that registered in 2021 or 2022 and never filed again will lose their CSR-1 status on 1 July 2026. Companies routing funds to such agencies will face penalties for using an unregistered entity.
2. Missing the 30-day transfer deadline: Many companies historically transferred unspent CSR in August or September, well within the old 6-month window. The new 30-day deadline means the transfer must happen by 30 April. Finance teams that close books in June will need to accelerate.
3. Ignoring the ₹1 crore impact assessment trigger: A company running 5 CSR projects of ₹2 crore each now needs 5 separate impact assessments, not zero (as under the old ₹10 crore threshold). Budget for assessment costs and build the requirement into vendor contracts.
4. Using stale DARPAN IDs: If the implementing agency's DARPAN registration has expired or shows outdated information, the CSR-1 renewal will be rejected. Companies should verify their partners' DARPAN status before committing funds.
5. Booking employee welfare as CSR: Employee health camps, training programmes, and recreational activities for staff do not qualify as CSR under Schedule VII unless they specifically target differently-abled employees or employees from marginalised communities under a specific Schedule VII clause. This mistake triggers both Section 135(7) penalties and the requirement to re-spend the disqualified amount.
6. Not mapping projects to Schedule VII clauses: Form CSR-2 now requires project-by-project mapping to specific Schedule VII clauses (i through xii). Vague descriptions like "rural development activities" without citing Clause (x) will face RoC queries and potential rejection.
7. Skipping quarterly CSR Committee reviews: The amendment under Rule 5(2) (amended) requires quarterly reviews. If your Board minutes do not show quarterly CSR Committee discussions, the compliance is technically incomplete even if the spending and filing are on time.
8. Not disclosing CSR details in the Board Report: Under Section 135(4) read with Rule 9, the Board Report must include the annual report on CSR in the prescribed format (Annexure-II). The CSR report is annexed to the Board Report filed with Form AOC-4. Missing this attracts a separate penalty under Section 134(8): ₹3 lakh fine on the company and ₹50,000 to ₹5 lakh on every officer in default.

For a full compliance calendar covering CSR and all other filing deadlines, the statutory compliance calendar for H2 2026 aligns CSR dates with AOC-4, MGT-7, and other obligations.

Impact Assessment: The ₹1 Crore Threshold and What It Means

The reduction of the impact assessment threshold from ₹10 crore to ₹1 crore is arguably the most operationally complex change in the May 2026 amendment. Most medium-to-large CSR programmes involve project outlays between ₹1 crore and ₹10 crore, which means this change captures a far larger share of CSR spending.

What an Impact Assessment Report Must Include

• Project objectives and alignment with Schedule VII clause
• Geographic scope and beneficiary demographics
• Total outlay versus actual expenditure
• Measurable outcomes against initial targets
• Sustainability of project impact beyond the CSR funding period
• Independent assessor's qualifications and methodology

The assessment must be conducted by an independent agency under Rule 8(3) of the Companies (CSR Policy) Rules, 2014 (as amended), not by the implementing entity or the company itself. The report must be filed along with Form CSR-2 within 90 days of project completion. For ongoing multi-year projects under Section 135(6), interim assessments are recommended annually, though the formal filing requirement applies only at project completion.

The cost of an independent impact assessment typically ranges from ₹50,000 to ₹3 lakh depending on project scale and geographic spread. Companies should factor this into their CSR budget, because the assessment cost itself does not count as CSR expenditure.

For companies running multiple CSR projects in the ₹1 crore to ₹5 crore range, the cumulative assessment cost can be significant. A company with 8 projects each at ₹1.5 crore would need 8 independent assessments, potentially costing ₹4 lakh to ₹24 lakh in assessment fees alone. The practical approach is to consolidate CSR projects where possible, negotiate bulk assessment contracts with independent agencies, and build assessment deliverables into the initial project agreement with implementing agencies. Companies that wait until project completion to engage an assessor often face rushed reports that do not meet RoC scrutiny standards.

Action Items: What Companies Must Do Now

If your company is CSR-applicable for FY 2026-27, or if you run an implementing agency, here is the action checklist. These are not optional; each item maps directly to a compliance requirement under the amended rules.

For CSR-Applicable Companies

1. Recalculate CSR applicability: Apply the revised ₹10 crore net profit threshold to determine if Section 135 still applies to your company for FY 2026-27
2. Transfer unspent CSR by 30 April 2026: Reconcile FY 2025-26 CSR spending and transfer any unspent amount within 30 days
3. Approve the FY 2026-27 CSR action plan: The CSR Committee must approve the action plan before 1 April 2026
4. Set up quarterly CSR reporting: Create a process for project-wise spending data to reach the CSR Committee every quarter
5. Verify implementing agencies: Confirm that every NGO, trust, or Section 8 company you fund has a valid CSR-1 registration renewed by 30 June 2026
6. Budget for impact assessments: Identify all CSR projects with outlays of ₹1 crore or more and engage independent assessment agencies
7. Update CSR policy: Revise the board-approved CSR policy to reflect the new thresholds, timelines, and Committee responsibilities

For Implementing Agencies (NGOs, Trusts, Section 8 Companies)

1. Renew CSR-1 by 30 June 2026: File the annual CSR-1 renewal on the MCA portal with updated DARPAN ID and project portfolio
2. Verify DARPAN registration: Ensure your DARPAN Unique ID is active and entity details match the MCA registration certificate exactly
3. Prepare project documentation: Compile project-wise spending reports, beneficiary data, and Schedule VII clause mapping for partner companies' CSR-2 filings
4. Engage with corporate partners: Share your renewed CSR-1 registration number with all companies routing CSR funds to your entity

For companies and implementing agencies that need assistance with CSR-1 renewal, CSR-2 filing, impact assessment coordination, or annual RoC filings, professional charges start at ₹9,999. Government fees are charged at actuals.

Summary

The MCA CSR Policy Amendment of May 2026, notified under G.S.R. 389(E) dated 14 May 2026, amending the Companies (Corporate Social Responsibility Policy) Rules, 2014 under Section 135 of the Companies Act, 2013, is not a minor rule tweak. It fundamentally changes the cadence of CSR compliance from an annual exercise to a year-round governance process. The three changes that matter most: CSR-1 is now annual under Rule 4(2) (amended), impact assessments start at ₹1 crore under Rule 8(3) (amended), and unspent CSR must be transferred within 30 days under Section 135(6) (amended). Companies that adapt their CSR governance structure at the start of FY 2026-27 will avoid penalties and operational disruptions. Companies that wait until March 2027 will face compressed deadlines, penalty notices under Section 135(7), and rushed impact assessments on projects that should have been evaluated months earlier. For a complete view of CSR compliance after the threshold change, the CSR compliance guide under Section 135 covers the full framework. For companies needing professional assistance with CSR-1 filing, CSR-2 reporting, and annual compliance services, working with a compliance team early in the financial year is the most practical step forward.

Regulatory Sources and References

This article is based on the following primary legislative and regulatory sources. All Section and Rule references in this article are drawn directly from these documents.