India's Corporate Laws Amendment Bill 2026: New CSR Rules and LLP Compliance Changes
India tabled the Corporate Laws Amendment Bill 2026 in Parliament in March 2026, proposing significant changes to the Companies Act 2013 CSR provisions and the LLP Act 2008. India's mandatory CSR framework — the world's first statutory corporate social responsibility law — requires companies with net profit of Rs 5 crore or more to spend 2% of average net profits on Schedule VII social activities. In FY 2023-24, 22,000 eligible companies collectively spent Rs 29,987 crore on CSR. The 2026 bill proposes decriminalising 35 violations, reducing LLP compliance thresholds, and expanding CSR carryforward to 5 years. This calculator computes your exact obligation and the financial consequences of non-compliance.
About This Calculator: India CSR Corporate Law Compliance
Why: With the 2026 amendment bill proposing significant changes and 16% of eligible companies still non-compliant, every CFO, Company Secretary, and compliance officer needs to know their exact obligation and the financial consequences of missing it.
How: Enter your company's average net profit over the last 3 years, company type, annual turnover, net worth, and number of employees. For LLPs, enter turnover in lakhs. The calculator applies Section 135 thresholds, computes mandatory CSR, and models penalties and Schedule VII allocation.
📋 Quick Examples — Click to Load
📊 CSR Obligation by Net Profit Level
Mandatory CSR spend at different net profit levels — your current obligation is highlighted
🥧 Recommended Schedule VII CSR Allocation
Typical allocation across eligible Schedule VII activities based on national industry patterns
⚖️ CSR Obligation vs Penalty Comparison
Mandatory CSR spend vs. company penalty for non-compliance vs. officer penalty
📈 Projected CSR Obligation Growth (FY25-FY30)
Projected CSR obligation and penalty risk over 6 years assuming 12% annual profit growth
⚠️For educational and informational purposes only. Verify with a qualified professional.
India tabled its Corporate Laws Amendment Bill 2026 in Parliament in March 2026, proposing significant changes to the Companies Act 2013's CSR provisions and the LLP Act 2008. India's mandatory CSR framework (Section 135, Companies Act) is the world's first national law requiring companies to spend 2% of their average three-year net profit on social development activities. In FY 2023-24, approximately 22,000 eligible companies collectively spent Rs 29,987 crore on CSR — nearly USD 3.6 billion. The 2026 bill proposes decriminalisation of 35 minor violations, reduced compounding fees for LLPs, enhanced digital reporting, and expanded CSR carryforward provisions. For company secretaries, CFOs, and compliance officers, this calculator computes your exact obligation under Section 135 and the new LLP compliance costs under the 2026 amendments.
Sources: Companies Act 2013 Section 135, MCA CSR Portal, CSR Rules 2014 (amended 2021), Ministry of Corporate Affairs Annual Report 2024.
Key Takeaways
- • A company becomes CSR-eligible if it meets ANY ONE of three thresholds: net profit Rs 5 crore or more, turnover Rs 1,000 crore or more, or net worth Rs 500 crore or more — in the preceding financial year
- • The 2021 CSR amendment changed the penalty framework: unspent CSR must now be transferred to specified funds within 6 months, and failure triggers company penalty up to Rs 1 crore and officer penalty up to Rs 2 lakh
- • India's CSR law is unique globally — it mandates not just reporting but actual spending, making it a "comply or pay penalty" regime unlike the "comply or explain" approach in Europe
- • The Corporate Laws Amendment Bill 2026 proposes lowering the LLP compliance threshold from Rs 100 lakh to Rs 40 lakh turnover, bringing an additional 35,000+ LLPs into mandatory audit/compliance scope
Did You Know?
How India's CSR Compliance Framework Works
Section 135 — Eligibility and Calculation
Eligibility is triggered if the company (in the immediately preceding financial year) had net profit of Rs 5 crore or more, turnover of Rs 1,000 crore or more, OR net worth of Rs 500 crore or more. The obligation is 2% of the average net profits of the preceding THREE financial years (not just the current year). Net profit is calculated per Section 198 — it is profit before tax, adjusted to exclude capital gains, subsidy income, and include certain disallowances. Each year's profit must be non-negative for averaging (loss years count as zero).
2021 Amendment: The "Transfer or Penalty" Framework
Prior to 2021, unspent CSR was simply disclosed and explained. The 2021 amendment created a mandatory transfer requirement: any unspent CSR amount for ongoing projects must be transferred to an Unspent CSR Account within 30 days of the financial year end. Amounts not tied to ongoing projects must be transferred to a specified Schedule VII fund (PM CARES, Clean Ganga, etc.) within 6 months of the year end. Failure to transfer triggers company penalty up to Rs 1 crore and officer penalty up to Rs 2 lakh.
Corporate Laws Amendment Bill 2026 — Key Proposed Changes
The bill tabled in March 2026 proposes: (1) Decriminalisation of 35 technical offences under the Companies Act, replacing imprisonment with civil penalties, (2) Lower LLP audit threshold from Rs 100 lakh to Rs 40 lakh turnover, (3) New digital compliance certificates for LLPs replacing paper-based filings, (4) Enhanced CSR carryforward window from 3 to 5 years for long-gestation projects, and (5) Mandatory CSR impact assessment for companies spending Rs 10 crore or more annually.
Expert CSR Compliance Tips
India CSR Compliance: Key Thresholds and Consequences
| Parameter | Pre-2021 Rule | Post-2021 Rule | 2026 Amendment |
|---|---|---|---|
| Unspent CSR | Disclose only | Transfer to Fund | Same + impact report |
| Company Penalty | None (explain) | Rs 1 crore max | Unchanged |
| Carryforward Period | 3 years | 3 years | 5 years (proposed) |
| Impact Assessment | Voluntary | Mandatory Rs 10 Cr+ | Enhanced scope |
| LLP Audit Threshold | Rs 100 lakh | Rs 100 lakh | Rs 40 lakh (proposed) |
Frequently Asked Questions
Which companies are required to spend on CSR under the Companies Act?
Under Section 135 of the Companies Act 2013, CSR spending is mandatory for companies that meet ANY one of three thresholds in the preceding financial year: (1) Net worth of Rs 500 crore or more, (2) Turnover of Rs 1,000 crore or more, or (3) Net profit of Rs 5 crore or more. The mandatory spend is 2% of the average net profits of the preceding three financial years. As of FY 2024-25, approximately 22,000 companies qualify for mandatory CSR.
How is the mandatory CSR amount calculated under Section 135?
The mandatory CSR spend = 2% × (average net profit of the last 3 financial years). Net profit for CSR purposes is calculated as per Section 198 of the Companies Act — this is the profit before tax (PBT) adjusted for certain additions and deductions. Capital expenditure is not counted as net profit. If the company had a loss in any year, that year's profit is taken as zero (not negative). For example, a company with average net profit of Rs 50 crore over 3 years must spend Rs 1 crore on CSR annually.
What is the penalty for not spending the mandatory CSR amount in India?
Under the CSR Amendment Rules 2021 (effective January 22, 2021): if a company fails to spend its CSR obligation, it must transfer the unspent amount to a specified fund (PM CARES, CII Foundation, etc.) within 6 months of the financial year end. If the company fails to do this, penalties apply: company pays twice the unspent CSR amount or Rs 1 crore, whichever is less; officers in default pay 10% of the CSR obligation or Rs 2 lakh, whichever is less. Repeat violations attract escalating penalties.
What activities qualify as CSR under Schedule VII of the Companies Act?
Schedule VII lists eligible CSR activities including: eradicating hunger and poverty, promoting education and healthcare, environmental sustainability, protection of national heritage, rural development, slum area development, measures for the benefit of armed forces veterans, promotion of sports, contribution to PM's National Relief Fund, disaster management, and technology incubators. CSR spending must benefit India only and cannot be normal business activities, employee benefit schemes, or activities outside India.
What are the new LLP compliance requirements under the 2026 amendment bill?
The India Corporate Laws Amendment Bill 2026 (tabled in Parliament in March 2026) proposes key changes to the LLP Act 2008: (1) Mandatory annual compliance certificate from a Chartered Accountant for LLPs with turnover above Rs 40 lakh (reduced from Rs 100 lakh), (2) New digital compliance filing requirements reducing manual processes, (3) Enhanced reporting for LLPs engaged in regulated sectors (banking, insurance, capital markets), and (4) Reduced compounding fees for minor procedural violations (from Rs 10,000 to Rs 5,000). The bill also proposes decriminalisation of 35 offences in the Companies Act.
Can CSR spending be carried forward if a company overspends in one year?
Yes. Under the CSR Rules 2014 (as amended 2021), companies can set off CSR expenditure in excess of the mandated amount against future obligations for up to 3 financial years. This provision encourages strategic multi-year CSR commitments. For example, if a company's obligation is Rs 2 crore and they spend Rs 5 crore in Year 1, the excess Rs 3 crore can be credited against Year 2 and Year 3 obligations. Companies must disclose this set-off in the Board's CSR Report and Annual Report.
Key Statistics
Official Data Sources
⚠️ Disclaimer: This calculator provides estimates based on Section 135 of the Companies Act 2013, the CSR Rules 2014 as amended in 2021, and the proposed Corporate Laws Amendment Bill 2026 (which has not yet received Presidential assent as of March 2026). Actual CSR obligations depend on net profit calculated strictly per Section 198 of the Companies Act, which requires professional accounting determination. LLP compliance fees are indicative and subject to final amendment bill provisions. Penalty amounts are maximum statutory limits; actual penalties imposed by the Registrar of Companies depend on the specific facts and mitigating circumstances. Always consult a qualified Company Secretary or Chartered Accountant for binding compliance advice.
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