Consider the following statements regarding Schedule VII activities and their interpretative scope:
1. The Companies Act, 2013 introduced Section 135, which formalizes the framework for Corporate Social Responsibility activities listed under Schedule VII.
2. Schedule VII includes the promotion of education, including special education and employment enhancing vocation skills, as a recognized area for CSR expenditure.
3. The High Level Committee on CSR, constituted in 2015, recommended that CSR funds be utilized for the development of smart cities, which was subsequently incorporated into Schedule VII via the 2016 amendment.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is correct. Statement 2 is correct. Statement 3 is incorrect.
Statement 1 is correct as Section 135 of the Companies Act, 2013, mandates CSR for companies meeting specific turnover, net worth, or profit thresholds. Statement 2 is correct because 'promoting education' and 'enhancing vocational skills' are explicitly listed as eligible activities under Item (ii) of Schedule VII. Statement 3 is incorrect because, while the High Level Committee on CSR (2015) suggested including 'slum area development' and 'Swachh Bharat Kosh', the development of 'Smart Cities' was never incorporated as a standalone activity under Schedule VII.
Consider the following statements regarding Treatment of CSR surplus and its reinvestment:
1. The Companies Act 2013 allows companies to distribute surplus CSR funds as dividends to shareholders if the project achieves its objectives before the end of the fiscal year.
2. The National CSR Data Portal records indicate that surplus funds from CSR activities are eligible for tax deduction under Section 80G of the Income Tax Act, provided they are reinvested within three months.
3. Under the Companies (Corporate Social Responsibility Policy) Amendment Rules 2021, any surplus arising out of CSR activities is not considered part of the business profit of a company.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 3 is correct. Statement 1 is incorrect. Statement 2 is incorrect.
Statement 3 is correct because the Companies (CSR Policy) Amendment Rules, 2021 explicitly mandate that any surplus arising out of CSR activities shall not form part of the business profit and must be plowed back into the same project or transferred to the Unspent CSR Account. Statement 1 is incorrect as CSR surplus cannot be distributed as dividends; it must be utilized for CSR purposes only. Statement 2 is incorrect because, per the Income Tax Act, CSR expenditure is not eligible for deduction under Section 80G, and the three-month reinvestment rule is not a provision under current tax or CSR regulations.
Consider the following statements regarding Treatment of CSR surplus and its reinvestment:
1. The 2021 amendment to the CSR rules clarifies that surplus CSR funds can be transferred to a special account if the amount relates to an ongoing project as defined under Section 135.
2. A company is permitted to transfer surplus CSR funds to a Fund specified in Schedule VII within a period of six months from the expiry of the financial year.
3. As per the Ministry of Corporate Affairs notification dated 22 January 2021, surplus funds from CSR activities are excluded from the computation of the net profit of the company.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is correct. Statement 2 is correct. Statement 3 is correct.
All three statements are correct under the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021. Statement 1 is correct as surplus funds from an ongoing project must be transferred to a separate 'Unspent CSR Account' within 30 days of the financial year's end. Statement 2 is correct because any surplus arising from CSR activities must be transferred to a Schedule VII fund within six months of the financial year's expiry. Statement 3 is correct as the 2021 notification explicitly mandates that surplus CSR funds shall not form part of the business profits of a company, ensuring they are ring-fenced for future CSR activities.
Consider the following statements regarding Schedule VII activities and their interpretative scope:
1. The contribution to the Prime Minister's Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund) is recognized as a permissible CSR activity under item (viii) of Schedule VII.
2. The Ministry of Corporate Affairs issued a notification on 22 January 2021, which expanded the scope of Schedule VII to include contributions to incubators funded by the Central or State Government.
3. Under the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021, companies are permitted to undertake CSR activities through registered public trusts or societies.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is correct. Statement 2 is correct. Statement 3 is correct.
Statement 1 is correct as the Ministry of Corporate Affairs clarified that contributions to the PM CARES Fund qualify as CSR expenditure under item (viii) of Schedule VII. Statement 2 is correct because the 2021 amendments explicitly expanded the scope to include contributions to incubators funded by Central/State governments or public sector undertakings. Statement 3 is correct as the 2021 Rules mandate that CSR activities can be implemented by the company itself or through entities like registered public trusts, societies, or Section 8 companies, provided they have a track record of at least three years.
Consider the following statements regarding Role of the Ministry of Corporate Affairs in CSR monitoring:
1. The Companies (CSR Policy) Amendment Rules, 2021, allows for the set-off of excess CSR spending against future obligations for up to five succeeding financial years, provided the board resolution is filed with the Reserve Bank of India.
2. The Ministry of Corporate Affairs functions under the administrative control of the Ministry of Finance, which oversees the CSR reporting portal and publishes the annual National CSR Awards.
3. The 2013 Companies Act includes provisions for the CSR Committee to consist of at least four directors, one of whom serves as an independent director to oversee the expenditure of funds.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is incorrect. Statement 2 is incorrect. Statement 3 is incorrect.
Statement 1 is incorrect because excess CSR spending can be set off for three succeeding financial years, and board resolutions are filed with the Registrar of Companies, not the RBI. Statement 2 is incorrect as the Ministry of Corporate Affairs is an independent ministry, not under the Ministry of Finance. Statement 3 is incorrect because the Companies Act, 2013 mandates that the CSR Committee must consist of at least three directors, including at least one independent director.
Consider the following statements regarding Net profit calculation methodology for CSR spending:
1. The computation of net profit for CSR purposes incorporates the unrealized gains from the revaluation of assets, as recorded in the balance sheet at the end of the fiscal year.
2. Companies are permitted to offset any excess CSR expenditure incurred in a financial year against the requirement for the succeeding three financial years.
3. The Companies (Amendment) Act, 2019, provides for the inclusion of capital grants received from the central government as a component of the net profit for CSR eligibility.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 2 is correct. Statement 1 is incorrect. Statement 3 is incorrect.
Statement 2 is correct because the Companies (CSR Policy) Amendment Rules, 2021, allow companies to set off excess CSR spending against the CSR obligation for the succeeding three financial years. Statement 1 is incorrect because, per Section 135 of the Companies Act, 2013, net profit excludes unrealized gains, mark-to-market gains, and surplus arising from asset revaluation. Statement 3 is incorrect because capital grants or subsidies received from the Central or State government are explicitly excluded from the computation of net profit for CSR purposes.
Consider the following statements regarding Role of the Board of Directors in CSR policy formulation:
1. The CSR Policy framework allows the Board to transfer unspent CSR funds to the Prime Minister's National Relief Fund, and such transfers are categorized as administrative overheads under the 2021 Rules.
2. The National Guidelines on Responsible Business Conduct (NGRBC) of 2019 provides for the Board to appoint an independent CSR auditor, and the audit report is filed with the Registrar of Companies.
3. The Companies Act, 1956, introduced the requirement for a CSR Committee, and the Ministry of Corporate Affairs notified the first set of CSR rules in 2012.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is incorrect. Statement 2 is incorrect. Statement 3 is incorrect.
Statement 1 is incorrect because transfers to the PM National Relief Fund are treated as CSR expenditure, not administrative overheads, which are capped at 5% of total CSR expenditure. Statement 2 is incorrect as the NGRBC are voluntary principles and do not mandate the appointment of an independent CSR auditor for filing with the Registrar. Statement 3 is incorrect because the CSR mandate was introduced by the Companies Act, 2013, not 1956, and the first set of CSR rules was notified in 2014, not 2012.
Consider the following statements regarding Penal provisions for non-compliance with CSR mandates:
1. Section 135(7) of the Companies Act, 2013, provides for a compounding mechanism overseen by the Regional Director for CSR defaults, where the penalty amount is capped at fifty lakh rupees regardless of the total unspent balance.
2. The 2021 amendment to the CSR Policy Rules provides for the creation of an independent CSR Authority under the Ministry of Corporate Affairs, which holds the power to initiate criminal proceedings against board members for failure to constitute a CSR Committee.
3. The Ministry of Corporate Affairs notified the Companies (CSR Policy) Amendment Rules on 22 January 2021, which shifted the CSR regime from a 'comply or explain' approach to a penalty-based enforcement mechanism.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 3 is correct. Statement 1 is incorrect. Statement 2 is incorrect.
Statement 3 is correct as the 2021 amendment transitioned CSR from a 'comply or explain' model to a mandatory penalty-based regime. Statement 1 is incorrect because Section 135(7) imposes a penalty on the company (up to twice the amount required to be transferred to the Fund or one crore rupees, whichever is less) and on every officer in default, rather than a flat cap overseen by the Regional Director. Statement 2 is incorrect because no independent 'CSR Authority' was created; enforcement remains under the jurisdiction of the Registrar of Companies, and the 2021 amendments focused on civil monetary penalties rather than criminal proceedings for board members.
Consider the following statements regarding Role of the Board of Directors in CSR policy formulation:
1. Section 135 of the Companies Act, 2013, provides that the Board of every company meeting the prescribed financial thresholds shall constitute a CSR Committee.
2. Rule 5 of the Companies (CSR Policy) Rules, 2014, specifies that the Board of a company shall ensure that the activities included in the CSR Policy are undertaken by the company.
3. The CSR Committee of the Board is responsible for formulating and recommending to the Board a CSR Policy which indicates the activities to be undertaken by the company.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is correct. Statement 2 is correct. Statement 3 is correct.
Section 135 of the Companies Act, 2013, mandates that companies meeting specific net worth, turnover, or profit thresholds must constitute a CSR Committee to oversee social responsibility initiatives. Rule 5 of the Companies (CSR Policy) Rules, 2014, explicitly empowers the Board to ensure that the company undertakes activities aligned with its approved CSR policy. Furthermore, the CSR Committee is legally tasked with formulating and recommending the CSR policy and its budget to the Board for final approval, making all three statements accurate reflections of the statutory framework.
Consider the following statements regarding Schedule VII activities and their interpretative scope:
1. The 2014 CSR Rules allow companies to include expenditure on activities undertaken in the normal course of business, provided such projects are located in the same district as the company's registered office.
2. Schedule VII encompasses the protection of national heritage, and the 2013 Act permits companies to claim CSR credits for the maintenance of buildings owned by private religious trusts.
3. The Companies Act, 1956 originally contained provisions for mandatory CSR spending, which were later refined by the National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business, 2011.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is incorrect. Statement 2 is incorrect. Statement 3 is incorrect.
Statement 1 is incorrect because the Companies (CSR Policy) Rules, 2014 explicitly exclude activities undertaken in the normal course of business from CSR eligibility, regardless of location. Statement 2 is incorrect as Schedule VII does not permit CSR expenditure for the maintenance of private religious trusts, as CSR activities must be for the public good and not benefit specific private entities. Statement 3 is incorrect because the Companies Act, 1956 did not contain mandatory CSR provisions; the mandatory CSR regime was introduced for the first time under Section 135 of the Companies Act, 2013.
Consider the following statements regarding CSR expenditure vs tax deductibility provisions:
1. Section 135 of the Companies Act, 2013, governs the CSR framework applicable to companies with a net worth of at least 500 crore rupees.
2. Companies are permitted to set off excess CSR spending against the mandatory 2 percent requirement for up to three succeeding financial years.
3. The Income Tax Act, 1961, does not permit CSR expenditure as a deductible business expense under Section 37(1) for the purpose of computing taxable income.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is correct. Statement 2 is correct. Statement 3 is correct.
Statement 1 is correct as Section 135 of the Companies Act, 2013, mandates CSR for companies meeting specific thresholds: net worth of ₹500 crore, turnover of ₹1,000 crore, or net profit of ₹5 crore. Statement 2 is correct because the Companies (CSR Policy) Amendment Rules, 2021, allow companies to carry forward excess CSR spending to set off against obligations in the three succeeding financial years. Statement 3 is correct because the Finance Act, 2014, explicitly clarified that CSR expenditure is not considered an 'expenditure incurred for the purposes of business' under Section 37(1) of the Income Tax Act, 1961, and thus is not tax-deductible.
Consider the following statements regarding CSR activities in aspirational districts and local areas:
1. The National CSR Data Portal, launched in 2018, provides for the automated transfer of unspent CSR funds from aspirational districts to the Prime Minister's National Relief Fund.
2. The NITI Aayog's Aspirational Districts Programme, launched in January 2018, identifies 112 districts for targeted development interventions through CSR convergence.
3. The Schedule VII of the Companies Act, 2013, encompasses rural development projects and identifies the District Collector as the primary authority for approving CSR expenditure in aspirational districts.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 2 is correct. Statement 1 is incorrect. Statement 3 is incorrect.
Statement 2 is correct as the Aspirational Districts Programme was launched by NITI Aayog in January 2018 to improve socio-economic indicators in 112 identified districts. Statement 1 is incorrect because the National CSR Data Portal does not facilitate automated transfers to the PMNRF; unspent funds are transferred to funds specified in Schedule VII, such as the PM CARES Fund, only after specific statutory timeframes. Statement 3 is incorrect because, under the Companies Act, 2013, the Board of Directors of the company-not the District Collector-is the primary authority responsible for approving and monitoring CSR expenditure.
Consider the following statements regarding Penal provisions for non-compliance with CSR mandates:
1. The Companies (Amendment) Act, 2019, established the National CSR Data Portal to monitor compliance and introduced a provision for the imprisonment of company directors for up to three years in cases of persistent CSR funding default.
2. Section 135 of the Companies Act, 2013, outlines the framework for CSR expenditure, while the Companies (Amendment) Act, 2020, introduced specific monetary penalties for non-compliance.
3. Under the 2020 amendment, a company failing to transfer unspent CSR funds to a specified fund within six months of the financial year-end faces a penalty of twice the amount required to be transferred or one crore rupees, whichever is less.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 2 is correct. Statement 3 is correct. Statement 1 is incorrect.
Statement 2 is correct as Section 135 governs CSR, and the 2020 Amendment decriminalized defaults by replacing imprisonment with monetary penalties. Statement 3 is correct because the 2020 Amendment mandates transferring unspent funds to a specified fund within six months, imposing a penalty of twice the amount required or one crore rupees, whichever is less. Statement 1 is incorrect because, while the National CSR Data Portal exists, the 2019 Amendment's proposal to imprison directors was withdrawn following industry backlash, and the current regime focuses on civil monetary penalties rather than incarceration.
Consider the following statements regarding Treatment of ongoing projects under CSR rules:
1. Ongoing projects initiated prior to the 2021 amendment of the Companies (CSR Policy) Rules remain eligible for CSR expenditure provided they are aligned with the revised Schedule VII activities.
2. The CSR Policy Amendment Rules of 2021 allow for the transfer of unspent funds to a dedicated 'Unspent CSR Account' within 30 days of the financial year-end for projects that have reached the implementation phase.
3. Section 135 of the Companies Act provides for the carry-forward of unspent CSR funds into the next financial year, provided the project was approved by the CSR Committee before the end of the third quarter.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is correct. Statement 2 is incorrect. Statement 3 is incorrect.
Statement 1 is correct as ongoing projects initiated before the 2021 amendments remain eligible if they align with Schedule VII, subject to board approval. Statement 2 is incorrect because the Companies (CSR Policy) Amendment Rules, 2021 require unspent funds for ongoing projects to be transferred to a special 'Unspent CSR Account' within 30 days of the end of the financial year, not specifically limited to the 'implementation phase'. Statement 3 is incorrect because Section 135 mandates that unspent funds for ongoing projects must be transferred to the 'Unspent CSR Account' within 30 days of the financial year-end to be utilized within three succeeding financial years, and there is no requirement that the project be approved specifically before the end of the third quarter.
Consider the following statements regarding CSR implementation through registered trusts and societies:
1. The Companies Act 2013 specifies that a company may implement its CSR activities through a registered trust, society, or Section 8 company established by the company itself or by any other entity.
2. Under the Companies (Corporate Social Responsibility Policy) Amendment Rules 2021, entities intending to undertake CSR activities are registered with the Central Government by filing Form CSR-1 electronically.
3. Rule 4(1) of the Companies (CSR Policy) Rules 2014 permits a company to engage international organizations for designing, monitoring, and evaluating CSR projects, provided they have prior approval from the Ministry of Corporate Affairs.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is correct. Statement 2 is correct. Statement 3 is correct.
Statement 1 is correct as Section 135 of the Companies Act, 2013, allows CSR implementation through registered trusts, societies, or Section 8 companies, whether established by the company itself or others. Statement 2 is correct because the 2021 Amendment Rules mandated that all entities intending to undertake CSR activities must register with the Central Government via Form CSR-1 to ensure transparency and accountability. Statement 3 is correct as Rule 4(1) permits companies to engage international organizations for CSR project design, monitoring, and evaluation, provided they obtain prior approval from the Ministry of Corporate Affairs as per the prescribed guidelines.
Consider the following statements regarding CSR spending on COVID-19 related relief measures:
1. The 2020 notification allowed contributions to the PM CARES Fund to be treated as an admissible CSR expenditure for companies under Section 135 of the Act.
2. Under the 2020 guidelines, companies are associated with the provision to count contributions made to State Disaster Management Authorities as CSR expenditure, provided the funds are transferred directly to the Chief Minister's Relief Fund.
3. The Ministry of Corporate Affairs allows CSR funds to be utilized for the payment of salaries to employees during the lockdown period, provided the company maintains a minimum of 500 permanent staff members.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is correct. Statement 2 is incorrect. Statement 3 is incorrect.
Statement 1 is correct because the Ministry of Corporate Affairs (MCA) issued a circular in March 2020 explicitly clarifying that contributions to the PM CARES Fund qualify as CSR expenditure under Schedule VII of the Companies Act, 2013. Statement 2 is incorrect because contributions to State Disaster Management Authorities are permitted, but funds transferred to the Chief Minister's Relief Fund or State Relief Funds do not qualify as CSR expenditure. Statement 3 is incorrect because the MCA clarified that spending CSR funds for the payment of salaries or wages to employees and workers during the COVID-19 lockdown period is not considered an admissible CSR activity.
Consider the following statements regarding Impact assessment requirements for large CSR projects:
1. Expenditure incurred for impact assessment is permitted to be booked as CSR expenditure for that financial year, provided it does not exceed 5 percent of the total CSR spend or 50 lakh rupees, whichever is less.
2. Companies with an average CSR obligation of 10 crore rupees or more in the three preceding financial years undertake mandatory impact assessment for projects with outlays of 1 crore rupees or more.
3. The Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021, introduced the requirement for impact assessment to be conducted by an independent agency for qualifying large-scale CSR projects.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is correct. Statement 2 is correct. Statement 3 is correct.
Statement 1 is correct as per the Companies (CSR Policy) Amendment Rules, 2021, which caps impact assessment expenditure at 5% of total CSR spend or 50 lakh rupees, whichever is less. Statement 2 is correct because the rules mandate impact assessment for companies with an average CSR obligation of 10 crore rupees or more for projects with outlays of 1 crore rupees or more. Statement 3 is correct as the 2021 Amendment Rules formally introduced the requirement for these mandatory impact assessments to be conducted by an independent agency to ensure transparency and accountability.
Consider the following statements regarding CSR expenditure vs tax deductibility provisions:
1. The Companies (CSR Policy) Amendment Rules, 2021, introduced the requirement for companies to file Form CSR-2 annually with the Registrar of Companies.
2. Contributions made to the Prime Minister's National Relief Fund qualify as eligible CSR activities under Schedule VII of the Companies Act, 2013.
3. Schedule VII of the Companies Act, 2013, includes provisions for the inclusion of employee welfare programs within the 2 percent CSR budget, provided these activities receive prior approval from the Income Tax Department.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is correct. Statement 2 is correct. Statement 3 is incorrect.
Statement 1 is correct as the Companies (CSR Policy) Amendment Rules, 2021, mandated the filing of Form CSR-2 to ensure better monitoring of CSR compliance. Statement 2 is correct because the Prime Minister's National Relief Fund is explicitly listed under Item (viii) of Schedule VII as an eligible activity. Statement 3 is incorrect because, per the Companies (CSR Policy) Rules, 2014, activities benefiting only employees and their families are explicitly excluded from CSR expenditure, and the Income Tax Department has no authority to override this statutory exclusion.
Consider the following statements regarding CSR implementation through registered trusts and societies:
1. The Companies Act 2013 defines CSR expenditure as any contribution to the Prime Minister's National Relief Fund, and the 2021 amendment includes the PM CARES Fund as a designated category for direct tax exemption.
2. The CSR Committee is chaired by an Independent Director according to the 2014 Rules, and this body holds the authority to register external NGOs on the MCA portal via Form CSR-2.
3. Section 135 of the Companies Act applies to every company with a net worth of 500 crore rupees, and such companies utilize the National CSR Data Portal to select government-approved implementing agencies.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is incorrect. Statement 2 is incorrect. Statement 3 is incorrect.
Statement 1 is incorrect because while the PM CARES Fund is an eligible CSR activity under Schedule VII, it is not a 'designated category for direct tax exemption' under the Companies Act. Statement 2 is incorrect as the CSR Committee is not mandated to be chaired by an Independent Director, and Form CSR-1 (not CSR-2) is the mandatory filing for registering implementing agencies with the MCA. Statement 3 is incorrect because Section 135 applies to companies with a net worth of Rs 500 crore, a turnover of Rs 1,000 crore, or a net profit of Rs 5 crore, and the National CSR Data Portal is for reporting, not for selecting government-approved agencies.
Consider the following statements regarding Prohibition of CSR activities for personal benefit or employee welfare:
1. The Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021, clarify that activities benefiting employees as defined in Section 2(k) of the Code on Wages, 2019, fall outside the scope of CSR expenditure.
2. Under the Ministry of Corporate Affairs General Circular No. 14/2021, contributions made to the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund qualify as CSR, provided they do not serve personal interests of company directors.
3. The Companies Act, 2013, Schedule VII, lists activities eligible for CSR, which excludes projects or programs that are conducted for the benefit of employees of the company or their families.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is correct. Statement 2 is correct. Statement 3 is correct.
All three statements are correct: Statement 1 is accurate as the 2021 Amendment Rules explicitly exclude activities benefiting employees as defined under the Code on Wages, 2019, from CSR eligibility. Statement 2 is correct because the MCA clarified that contributions to the PM CARES Fund are an eligible CSR activity under Schedule VII, provided they adhere to the general principle of avoiding personal benefit for directors or employees. Statement 3 is correct as the Companies (CSR Policy) Rules, 2014, mandate that only activities undertaken in the normal course of business or for the exclusive benefit of employees and their families are excluded from CSR, ensuring the focus remains on broader societal welfare.
Consider the following statements regarding Role of the Board of Directors in CSR policy formulation:
1. The Board's Report under Section 134 of the Companies Act, 2013, includes an annual report on CSR activities in the format prescribed in the Annexure to the CSR Rules.
2. As per the Companies (Amendment) Act, 2020, the Board is responsible for ensuring that the company spends, in every financial year, at least two percent of the average net profits made during the three immediately preceding financial years.
3. The Board of Directors is tasked with monitoring the CSR Policy of the company from time to time to ensure effective implementation of the projects.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is correct. Statement 2 is correct. Statement 3 is correct.
All three statements are correct: Section 134 of the Companies Act, 2013, mandates the inclusion of a CSR report in the Board's annual filing, while the 2020 Amendment formalized the Board's legal obligation to ensure the mandatory 2% expenditure based on the average net profits of the preceding three years. Furthermore, the Board is explicitly tasked under the CSR Rules with the ongoing monitoring and oversight of CSR projects to ensure they align with the company's policy and achieve intended social outcomes.
Consider the following statements regarding International vs domestic CSR project eligibility:
1. Under Section 135 of the Companies Act, 2013, CSR expenditure is permitted for activities undertaken in India, thereby excluding international projects from the computation of the prescribed two percent spend.
2. The Ministry of Corporate Affairs issued a circular in 2021 permitting companies to count expenditure on disaster management initiatives in neighboring countries as part of their CSR obligations under Schedule VII.
3. The Companies (Corporate Social Responsibility Policy) Rules, 2014, allow companies to collaborate with international organizations for capacity building of their own personnel and implementation agencies, provided the project remains within Indian territory.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is correct. Statement 3 is correct. Statement 2 is incorrect.
Statement 1 is correct as Section 135 of the Companies Act, 2013, mandates CSR activities to be undertaken within India to benefit the local population. Statement 3 is correct because the 2014 Rules allow collaboration with international organizations for capacity building, provided the project is implemented domestically. Statement 2 is incorrect because, despite frequent policy discussions, the Ministry of Corporate Affairs has not amended Schedule VII to permit CSR expenditure for disaster management in neighboring countries, maintaining the strict domestic-only requirement.
Consider the following statements regarding Treatment of unspent CSR funds and transfer to Unspent CSR Account:
1. The Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021, specify that if a company fails to spend the amount transferred to the Unspent CSR Account within three financial years, the funds are moved to a Fund specified in Schedule VII.
2. Under Section 135(6) of the Companies Act, 2013, any amount remaining unspent pursuant to an ongoing project is transferred to a special account called the Unspent Corporate Social Responsibility Account within thirty days from the end of the financial year.
3. The National CSR Data Portal provides for the automatic debiting of unspent CSR funds from a company's bank account if the audit committee identifies a shortfall in the annual expenditure report filed by March 31.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is correct. Statement 2 is correct. Statement 3 is incorrect.
Statement 1 is correct as per the 2021 Amendment Rules, which mandate that if unspent funds related to an ongoing project remain unused after three financial years, they must be transferred to a fund specified in Schedule VII within thirty days. Statement 2 is correct because Section 135(6) of the Companies Act, 2013, requires the transfer of unspent amounts for ongoing projects to a dedicated 'Unspent Corporate Social Responsibility Account' within thirty days of the financial year's end. Statement 3 is incorrect because there is no provision for the automatic debiting of bank accounts by the National CSR Data Portal; enforcement of CSR compliance relies on regulatory filings and penalties rather than automated bank withdrawals.
Consider the following statements regarding CSR reporting formats and disclosure requirements in Board Report:
1. The Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021, introduced the requirement for companies to annex an annual report on CSR activities to the Board Report.
2. Under the Companies (Accounts) Rules, 2014, the Board Report includes a detailed disclosure of the CSR policy and the web link where the policy is hosted by the company.
3. Section 135 of the Companies Act, 2013, specifies that the Board of Directors of every company meeting the prescribed threshold shall disclose the composition of the CSR Committee in its report.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is correct. Statement 2 is correct. Statement 3 is correct.
All three statements are correct: The 2021 Amendment Rules mandated the inclusion of a specific annual report on CSR in the Board Report to ensure transparency; the Companies (Accounts) Rules, 2014, require companies to disclose their CSR policy and its web link to facilitate public access; and Section 135 of the Companies Act, 2013, explicitly mandates that the Board of Directors disclose the composition of the CSR Committee in their report to ensure accountability. Since all provided statements accurately reflect the legal provisions under the Companies Act and its associated rules, there are no incorrect statements.
Consider the following statements regarding Prohibition of CSR activities for personal benefit or employee welfare:
1. The National Guidelines on Responsible Business Conduct, 2019, emphasize that businesses should engage with stakeholders, yet CSR spending remains distinct from statutory employee welfare obligations under the Factories Act, 1948.
2. The Companies (Amendment) Act, 2019, introduced provisions for the transfer of unspent CSR funds to a fund specified in Schedule VII, ensuring that such funds are not diverted for internal employee-related benefits.
3. The MCA FAQ on CSR, updated in 2023, reiterates that any expenditure incurred on activities for the benefit of employees as defined under the Code on Wages, 2019, is not considered as CSR expenditure.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is correct. Statement 2 is correct. Statement 3 is correct.
Statement 1 is correct as the Companies Act, 2013, explicitly excludes activities benefiting only employees from CSR, maintaining a clear distinction from statutory welfare obligations like the Factories Act. Statement 2 is correct because the 2019 Amendment mandates the transfer of unspent CSR funds to Schedule VII funds, preventing the diversion of these resources toward internal corporate interests. Statement 3 is correct as the Ministry of Corporate Affairs (MCA) clarifies that CSR is intended for external social impact, explicitly excluding expenditures on employees as defined under labor codes to prevent companies from counting routine staff welfare as CSR.
Consider the following statements regarding International vs domestic CSR project eligibility:
1. The Companies Amendment Act of 2019 introduced a provision allowing firms with a global turnover exceeding 5,000 crore rupees to allocate up to ten percent of their CSR budget to humanitarian aid projects located outside India.
2. The High Level Committee on Corporate Social Responsibility, 2018, recommended against the inclusion of international projects within the ambit of CSR, citing the need to prioritize domestic socio-economic development.
3. The National Guidelines on Responsible Business Conduct, 2019, suggests that Indian multinational corporations possess the flexibility to report expenditures on overseas community development as a component of their annual CSR compliance report.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 2 is correct. Statement 1 is incorrect. Statement 3 is incorrect.
Statement 2 is correct as the 2018 High Level Committee explicitly recommended against allowing CSR expenditure for international projects to ensure resources remain focused on domestic socio-economic priorities. Statement 1 is incorrect because the Companies Act, 2013, and its subsequent amendments do not permit CSR spending outside India, regardless of a company's global turnover. Statement 3 is incorrect because the National Guidelines on Responsible Business Conduct (NGRBC) focus on ethical business practices and do not provide a legal mandate or flexibility for reporting overseas expenditures as part of mandatory CSR compliance under Section 135 of the Companies Act.
Consider the following statements regarding CSR reporting formats and disclosure requirements in Board Report:
1. The Board Report is expected to contain the reasons for failing to spend the prescribed CSR amount if the company has not met the two percent average net profit criteria.
2. The CSR Committee is associated with the oversight of project implementation, and the Companies Act, 2013, includes provisions for the Committee to approve the final audit of CSR expenditure before the Board Report is finalized by the statutory auditors.
3. Companies with an average CSR obligation of ten crore rupees or more in the three immediately preceding financial years are covered under the mandatory impact assessment framework.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is correct. Statement 3 is correct. Statement 2 is incorrect.
Statement 1 is correct as Section 135(5) of the Companies Act, 2013, mandates that if a company fails to spend the prescribed 2% amount, the Board must specify the reasons in its report. Statement 3 is correct under the Companies (CSR Policy) Amendment Rules, 2021, which requires companies with an average CSR obligation of ₹10 crore or more in the preceding three fiscal years to undertake mandatory impact assessment for projects with outlays of ₹1 crore or more. Statement 2 is incorrect because, while the CSR Committee monitors project implementation, the Companies Act does not empower the Committee to approve the final audit of CSR expenditure; such financial oversight remains the responsibility of the Board and statutory auditors.
Consider the following statements regarding CSR reporting formats and disclosure requirements in Board Report:
1. The National Guidelines on Responsible Business Conduct, 2019, encompass the principles of CSR reporting, and the Securities and Exchange Board of India allows listed entities to submit these disclosures through the Business Responsibility and Sustainability Report.
2. The format for the annual report on CSR activities, provided in Annexure II of the CSR Rules, includes a section for reporting the impact assessment of projects with outlays of one crore rupees or more.
3. The Companies (CSR Policy) Amendment Rules, 2021, provide for a standardized disclosure format, and the Ministry of Corporate Affairs maintains a centralized digital portal for the real-time filing of these reports by individual employees.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 2 is correct. Statement 1 is incorrect. Statement 3 is incorrect.
Statement 2 is correct because the Companies (CSR Policy) Amendment Rules, 2021, mandate that companies with an average CSR obligation of Rs 10 crore or more must undertake impact assessment for projects with outlays of Rs 1 crore or more, which must be disclosed in the Board Report. Statement 1 is incorrect because while the BRSR is mandated by SEBI for the top 1,000 listed entities, it is distinct from the CSR reporting format under the Companies Act, 2013. Statement 3 is incorrect because the MCA does not maintain a portal for individual employees to file reports; instead, companies are required to file the annual CSR report (Form CSR-2) through the MCA21 portal at the corporate level.
Consider the following statements regarding Transfer of unspent funds to Fund specified in Schedule VII:
1. The Ministry of Corporate Affairs issued a circular in 2020 clarifying that the transfer of unspent CSR funds to the Prime Minister's National Relief Fund is permissible under the provisions of Schedule VII.
2. Companies are permitted to set off any amount spent in excess of the requirement provided under sub-section (5) of Section 135 against the CSR obligation for the succeeding three financial years.
3. If a company fails to spend the CSR amount for an ongoing project, the unspent funds are to be transferred to any fund specified in Schedule VII within a period of six months of the expiry of the financial year.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is correct. Statement 2 is correct. Statement 3 is correct.
Statement 1 is correct as the MCA clarified that contributions to the PMNRF qualify as CSR activities under Schedule VII. Statement 2 is correct under the Companies (CSR Policy) Amendment Rules, 2021, which allows companies to set off excess CSR spending against obligations for the succeeding three financial years. Statement 3 is correct because, under Section 135(6), unspent funds for ongoing projects must be transferred to a Schedule VII fund within 30 days of the expiry of the third financial year, while non-ongoing project funds must be transferred within six months of the financial year's end.
Consider the following statements regarding Impact assessment requirements for large CSR projects:
1. Schedule VII of the Companies Act, 2013, lists the sectors eligible for CSR, and the 2021 amendment includes provisions for impact assessment to be conducted by the internal audit department of the parent company.
2. The CSR Policy Amendment of 2021 provides for a transition period where companies with a net worth of 1000 crore rupees or more submit their impact assessment findings to the Registrar of Companies within 30 days of project completion.
3. The Board of Directors of a company is responsible for disclosing the details of the impact assessment report in the annual report on CSR activities as per the format prescribed in the Annexure to the 2014 Rules.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 3 is correct. Statement 1 is incorrect. Statement 2 is incorrect.
Statement 3 is correct as the Board of Directors must annex the impact assessment report to the annual CSR report. Statement 1 is incorrect because the 2021 amendment mandates that impact assessment must be conducted by an independent agency, not the internal audit department. Statement 2 is incorrect because the requirement applies to companies with an average CSR obligation of 10 crore rupees or more in the preceding three financial years, not based on a net worth of 1000 crore rupees.
Consider the following statements regarding Transfer of unspent funds to Fund specified in Schedule VII:
1. The 2021 Amendment to the CSR Policy framework provides for the automatic diversion of unspent funds to the National Disaster Response Fund if the company fails to identify an ongoing project by the end of the second quarter.
2. Under the 2014 CSR Rules, companies are permitted to carry forward unspent funds to the next fiscal cycle, and these amounts are eligible for inclusion in the calculation of the two percent average net profit criteria.
3. The National CSR Data Portal records indicate that unspent funds transferred to the Clean Ganga Fund are exempt from the six-month transfer window if the project duration exceeds thirty-six months.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is incorrect. Statement 2 is incorrect. Statement 3 is incorrect.
Statement 1 is incorrect because unspent funds for ongoing projects must be transferred to a 'Unspent CSR Account' within 30 days of the financial year-end, not the NDRF. Statement 2 is incorrect as the Companies (CSR Policy) Amendment Rules, 2021, mandate that unspent amounts for non-ongoing projects must be transferred to a Schedule VII fund within six months of the financial year-end, rather than being carried forward indefinitely. Statement 3 is incorrect because the law does not provide any such exemption for the Clean Ganga Fund based on project duration; all unspent funds must adhere to the strict transfer timelines prescribed under Section 135 of the Companies Act.
Consider the following statements regarding Role of the Ministry of Corporate Affairs in CSR monitoring:
1. Section 135 of the Companies Act, 2013, provides the legislative framework for CSR, which came into effect on 1 April 2014.
2. The Ministry of Corporate Affairs maintains the National CSR Data Portal, which tracks project-wise expenditure reported by companies since the 2014-15 financial year.
3. Rule 8 of the Companies (CSR Policy) Rules, 2014, provides that companies with an average CSR obligation of 10 crore rupees or more in the three preceding financial years engage an independent agency for impact assessment.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is correct. Statement 2 is correct. Statement 3 is correct.
Statement 1 is correct as Section 135 of the Companies Act, 2013, mandates CSR for specified companies effective from April 1, 2014. Statement 2 is correct because the Ministry of Corporate Affairs operates the National CSR Data Portal to ensure transparency by tracking project-wise expenditure data since the 2014-15 fiscal year. Statement 3 is correct as per the 2021 amendment to Rule 8(3) of the Companies (CSR Policy) Rules, 2014, which requires companies with an average CSR obligation of 10 crore rupees or more in the preceding three financial years to conduct an independent impact assessment for projects with outlays of 1 crore rupees or more.
Consider the following statements regarding CSR expenditure on capacity building and impact evaluation:
1. The Ministry of Corporate Affairs notification of 2014 permits companies to count expenditure on internal staff training as capacity building, provided the training program is certified by the National Skill Development Corporation.
2. Under the Companies Act, 2013, the CSR Committee holds the authority to approve impact evaluation reports, which are then submitted to the Comptroller and Auditor General for independent verification.
3. The Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021, permit companies to allocate up to 5% of their total CSR expenditure for a financial year toward impact assessment of projects with outlays of one crore rupees or more.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 3 is correct. Statement 1 is incorrect. Statement 2 is incorrect.
Statement 3 is correct as the Companies (CSR Policy) Amendment Rules, 2021, allow companies to spend up to 5% of the CSR outlay or 50 lakh rupees (whichever is less) on impact assessment for projects with outlays of 1 crore rupees or more. Statement 1 is incorrect because CSR rules do not permit counting internal staff training as CSR expenditure, regardless of certification. Statement 2 is incorrect because the CSR Committee is responsible for formulating and monitoring the policy, but there is no legal requirement under the Companies Act, 2013, to submit impact evaluation reports to the Comptroller and Auditor General (CAG) for verification.
Consider the following statements regarding Treatment of ongoing projects under CSR rules:
1. Under the Companies Act of 2013, the Board of Directors possesses the authority to reclassify any capital asset created through CSR funds as a personal asset of the company after the project completion date.
2. The Ministry of Corporate Affairs circular dated January 2021 permits companies to treat administrative overheads as a separate component of an ongoing project, capped at 10 percent of the total project cost.
3. The 2014 CSR rules introduced the concept of 'ongoing projects' as a distinct category, allowing companies to earmark funds for a duration of three years beyond the financial year of origin.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is incorrect. Statement 2 is incorrect. Statement 3 is incorrect.
Statement 1 is incorrect because CSR assets cannot be personal assets; they must be transferred to beneficiaries, local authorities, or registered public trusts. Statement 2 is incorrect as administrative overheads are capped at 5 percent, not 10 percent, of the total CSR expenditure for the financial year. Statement 3 is incorrect because the 'ongoing project' concept was introduced via the 2021 Amendment Rules, not the 2014 rules, and allows funds to be spent over the financial year plus three subsequent years.
Consider the following statements regarding Treatment of unspent CSR funds and transfer to Unspent CSR Account:
1. The 2021 Amendment Rules encompass the voluntary transfer of unspent CSR funds to the National Disaster Response Fund, which allows companies to bypass the Unspent CSR Account if the project is classified as a national priority.
2. The Ministry of Corporate Affairs issued the 2014 CSR guidelines, which provide for the immediate transfer of unspent funds to the Prime Minister's National Relief Fund if the project timeline exceeds two financial years.
3. The Companies Act, 2013, includes provisions for the Board of Directors to retain unspent CSR funds in the company's general reserve account for a period of five years before reporting the balance to the Registrar of Companies.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is incorrect. Statement 2 is incorrect. Statement 3 is incorrect.
All three statements are incorrect because the Companies (CSR Policy) Amendment Rules, 2021, mandate that unspent funds for ongoing projects must be transferred to a special 'Unspent CSR Account' within 30 days of the financial year-end, to be spent within three fiscal years, failing which they must be transferred to a Fund specified in Schedule VII. Statement 1 is false as there is no provision to bypass this account for 'national priority' projects; Statement 2 is false as the 2014 guidelines did not mandate such transfers to the PMNRF based on project timelines; and Statement 3 is false because the Act explicitly prohibits retaining unspent CSR funds in general reserves, requiring their transfer to the specified funds if not utilized within the stipulated timeframe.
Consider the following statements regarding CSR activities in aspirational districts and local areas:
1. The Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021, encourage companies to prioritize aspirational districts for their CSR expenditure.
2. Under the Companies Act, 2013, the Board of a company is empowered to decide the local area for CSR activities, provided it gives preference to the local area where it operates.
3. The Companies Act, 2013, includes provisions for a mandatory 25 percent allocation of CSR funds toward the Aspirational Districts Programme as defined by the 2019 amendment.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is correct. Statement 2 is correct. Statement 3 is incorrect.
Statement 1 is correct as the 2021 Amendment Rules explicitly encourage companies to prioritize aspirational districts in their CSR projects. Statement 2 is correct because Section 135(5) of the Companies Act, 2013, mandates that companies give preference to the local areas around their operations, while granting the Board the discretion to define these areas. Statement 3 is incorrect because there is no statutory provision or 2019 amendment mandating a fixed 25 percent allocation of CSR funds specifically for the Aspirational Districts Programme.
Consider the following statements regarding Composition and role of the CSR Committee:
1. The CSR Committee is responsible for recommending the amount of expenditure to be incurred on the activities referred to in Schedule VII of the Companies Act, 2013.
2. The Companies Act, 2013, establishes a CSR Committee threshold for companies with a turnover of one thousand crore rupees, and the Committee members are appointed by the Ministry of Corporate Affairs.
3. A company having an outstanding CSR obligation amount of fifty lakh rupees or more is permitted to create a separate bank account called the Unspent CSR Account.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is correct. Statement 3 is correct. Statement 2 is incorrect.
Statement 1 is correct as Section 135 of the Companies Act, 2013, mandates the CSR Committee to formulate and recommend the CSR policy and expenditure to the Board. Statement 3 is correct because the Companies (CSR Policy) Amendment Rules, 2021, require companies with unspent CSR funds for ongoing projects to transfer such amounts to a 'Unspent CSR Account' within 30 days of the financial year-end. Statement 2 is incorrect because, while the turnover threshold is indeed one thousand crore rupees, the CSR Committee members are appointed by the company's Board of Directors, not the Ministry of Corporate Affairs.
Consider the following statements regarding Impact assessment requirements for large CSR projects:
1. Under the 2014 CSR Rules, companies registered under Section 8 are exempt from impact assessment protocols if their annual net profit remains below 500 crore rupees for three consecutive years.
2. The Ministry of Corporate Affairs issued the 2013 Companies Act guidelines, which established the National CSR Data Portal to track impact assessment reports for projects exceeding 50 lakh rupees.
3. The High Level Committee on CSR, chaired by the Secretary of the Ministry of Corporate Affairs in 2019, recommended that impact assessment reports be submitted directly to the Comptroller and Auditor General of India.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is incorrect. Statement 2 is incorrect. Statement 3 is incorrect.
Statement 1 is incorrect because the Companies (CSR Policy) Amendment Rules, 2021 mandate impact assessment for projects with outlays of ₹1 crore or more, regardless of Section 8 status or profit thresholds. Statement 2 is incorrect as the National CSR Data Portal was launched in 2018 to track CSR spending, not specifically for impact assessment reports, and there is no such ₹50 lakh threshold for mandatory reporting. Statement 3 is incorrect because the 2019 High Level Committee recommended that impact assessment reports be placed before the company's Board and disclosed in the Board’s Report, rather than being submitted to the Comptroller and Auditor General of India.
Consider the following statements regarding Section 135 of the Companies Act 2013 applicability criteria:
1. Section 135 encompasses the requirement for companies to contribute 3 percent of their average net profits made during the three immediately preceding financial years.
2. The 2021 amendment rules refer to the inclusion of foreign companies in the CSR net, provided they maintain a branch office in India with a minimum capital investment of rupees 50 crore.
3. The Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021, introduced the requirement for companies to file form CSR-1 for the registration of implementing agencies.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 3 is correct. Statement 1 is incorrect. Statement 2 is incorrect.
Statement 1 is incorrect because Section 135 mandates a contribution of at least 2 percent, not 3 percent, of the average net profits of the three preceding financial years. Statement 2 is incorrect as the CSR mandate applies to foreign companies with a branch or project office in India based on the financial thresholds (net worth of Rs 500 crore, turnover of Rs 1000 crore, or net profit of Rs 5 crore), not a minimum capital investment of Rs 50 crore. Statement 3 is correct because the 2021 Amendment Rules mandated that any entity intending to undertake CSR activities must register with the Central Government by filing Form CSR-1.
Consider the following statements regarding CSR spending on COVID-19 related relief measures:
1. The 2021 amendment to the Companies (CSR Policy) Rules encompasses the direct transfer of CSR funds to individual healthcare workers, following the protocol established by the National Health Mission in April 2020.
2. Disaster management, including relief, rehabilitation, and reconstruction activities, falls under the scope of Schedule VII as per the government notification dated 28 March 2020.
3. The Ministry of Finance refers to the classification of COVID-19 vaccination drives as a CSR activity, allowing companies to claim a 150% tax deduction on expenses incurred for staff inoculation programs.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 2 is correct. Statement 1 is incorrect. Statement 3 is incorrect.
Statement 2 is correct because the Ministry of Corporate Affairs clarified on 28 March 2020 that spending CSR funds for COVID-19 relief, including disaster management activities, is an eligible CSR expenditure under Schedule VII of the Companies Act, 2013. Statement 1 is incorrect as CSR funds cannot be transferred directly to individuals, including healthcare workers, as per the Companies (CSR Policy) Rules. Statement 3 is incorrect because while COVID-19 vaccination is an eligible CSR activity, there is no provision for a 150% tax deduction; CSR expenditure is generally not eligible for tax deductions under the Income Tax Act.
Consider the following statements regarding Net profit calculation methodology for CSR spending:
1. The calculation of net profit under Section 198 includes profits earned by a company through its foreign subsidiaries, which are then subject to the 2% CSR spending threshold.
2. As per the Companies (CSR Policy) Amendment Rules, 2021, the surplus arising out of CSR activities is not considered part of the business profit of the company.
3. The calculation of net profit for CSR involves adding back the amount of CSR expenditure to the profit before tax as per the financial statements.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 2 is correct. Statement 3 is correct. Statement 1 is incorrect.
Statement 1 is incorrect because Section 198 of the Companies Act, 2013, calculates net profit based on the standalone financial statements of the company, explicitly excluding profits from foreign branches or subsidiaries. Statement 2 is correct under the 2021 Amendment Rules, which mandate that any surplus from CSR projects must be plowed back into the same project or transferred to the Unspent CSR Account/Fund, ensuring it is not treated as business profit. Statement 3 is correct as the Companies (CSR Policy) Rules, 2014, define net profit for CSR purposes as the profit before tax calculated under Section 198, which requires adding back the CSR expenditure incurred during the financial year.
Consider the following statements regarding Composition and role of the CSR Committee:
1. Companies with an average net profit of five crore rupees or more during the three immediately preceding financial years fall under the ambit of CSR provisions.
2. The Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021, introduced the requirement for companies to formulate an annual action plan for CSR activities.
3. Section 135 of the Companies Act, 2013, provides for the constitution of a CSR Committee consisting of three or more directors, including at least one independent director.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is correct. Statement 2 is correct. Statement 3 is correct.
Statement 1 is correct as Section 135 of the Companies Act, 2013, mandates CSR for companies meeting specific thresholds, including a net profit of ₹5 crore or more. Statement 2 is correct because the 2021 Amendment Rules mandated that the Board must formulate an annual action plan in pursuance of its CSR policy. Statement 3 is correct as the Act requires a CSR Committee of three or more directors, with at least one being an independent director, to oversee and monitor CSR activities.
Consider the following statements regarding International vs domestic CSR project eligibility:
1. The CSR Policy Rules were amended in 2020 to include international cooperation projects, specifically those aligned with the United Nations Sustainable Development Goals, as eligible activities for domestic companies.
2. The Department of Public Enterprises guidelines for Central Public Sector Enterprises provide for the categorization of cross-border infrastructure development as a recognized CSR activity if the project benefits the Indian diaspora.
3. The Companies Act, 2013, contains a clause that permits the Board of Directors to approve CSR projects in foreign jurisdictions if the company maintains a subsidiary presence in that specific country.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is incorrect. Statement 2 is incorrect. Statement 3 is incorrect.
Under the Companies Act, 2013 and the Companies (CSR Policy) Rules, 2014, CSR activities must be undertaken within India to be eligible, and there is no provision allowing for international projects or cross-border infrastructure development regardless of diaspora benefits or subsidiary presence. Statement 1 is false because CSR spending is strictly restricted to the Indian territory. Statement 2 is false as the Department of Public Enterprises guidelines do not authorize international infrastructure as CSR. Statement 3 is false because the Companies Act does not contain any clause permitting CSR expenditure in foreign jurisdictions.
Consider the following statements regarding Composition and role of the CSR Committee:
1. The 2021 Amendment Rules introduced a provision for impact assessment of CSR projects for companies with a CSR budget of ten crore rupees, which is overseen by the Securities and Exchange Board of India.
2. The Board of Directors of a company is responsible for disclosing the composition of the CSR Committee on the company's website as per the 2014 CSR Rules.
3. Schedule VII of the Companies Act, 2013, lists permissible CSR activities, and the CSR Committee is empowered to approve these projects without further oversight from the Board of Directors.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 2 is correct. Statement 1 is incorrect. Statement 3 is incorrect.
Statement 2 is correct as per the Companies (CSR Policy) Rules, 2014, which mandates the Board to disclose the CSR Committee's composition on the company website. Statement 1 is incorrect because impact assessment is mandatory for companies with a CSR budget of ₹10 crore or more, but it is overseen by the Board of Directors, not SEBI. Statement 3 is incorrect because the CSR Committee only recommends the CSR policy and projects to the Board, which retains the final authority and responsibility for approving and overseeing all CSR activities.
Consider the following statements regarding CSR implementation through registered trusts and societies:
1. The Ministry of Corporate Affairs established the CSR Compliance Cell in 2019, and this entity oversees the audit of all registered societies that receive CSR funding exceeding 10 lakh rupees annually.
2. The 2021 amendment introduced a mandatory 5 percent administrative overhead cap for CSR projects, and this limit applies to all implementing agencies including registered trusts and societies.
3. The Companies (CSR Policy) Rules 2014 allow companies to collaborate with other entities for CSR projects, and the Board of Directors submits a detailed impact assessment report to the Registrar of Companies every financial year.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is incorrect. Statement 2 is incorrect. Statement 3 is incorrect.
Statement 1 is incorrect as there is no such 'CSR Compliance Cell' mandated to audit societies receiving over 10 lakh rupees; CSR monitoring is primarily done through mandatory reporting in Form CSR-2. Statement 2 is incorrect because the 2021 amendments capped administrative overheads at 5 percent of the total CSR expenditure for the financial year, but this applies to the company's own expenditure, not specifically as a blanket cap for all implementing agencies. Statement 3 is incorrect because while companies can collaborate, the mandatory impact assessment is required only for companies with an average CSR obligation of 10 crore rupees or more in the preceding three financial years, and it is not a universal annual requirement for all CSR projects.
Consider the following statements regarding Section 135 of the Companies Act 2013 applicability criteria:
1. A company reporting a net profit of rupees 5 crore or more during the immediately preceding financial year qualifies for CSR expenditure obligations.
2. The Ministry of Corporate Affairs allows companies with a turnover of rupees 500 crore to claim tax exemptions under Section 80G, provided they maintain a dedicated CSR corpus.
3. The CSR Committee of the Board consists of three or more directors, including at least one independent director, as per the 2013 legislative framework.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is correct. Statement 3 is correct. Statement 2 is incorrect.
Statement 1 is correct as Section 135 applies to companies with a net profit of ₹5 crore or more, a turnover of ₹1,000 crore or more, or a net worth of ₹500 crore or more. Statement 3 is correct because the Companies Act mandates a CSR Committee comprising three or more directors, including at least one independent director. Statement 2 is incorrect because CSR expenditure is not eligible for tax deductions under Section 80G, and the Act does not provide specific tax exemptions linked to a dedicated CSR corpus for companies meeting the turnover criteria.
Consider the following statements regarding Treatment of unspent CSR funds and transfer to Unspent CSR Account:
1. Section 135(5) refers to the carry-forward mechanism for CSR expenditure, which allows companies to offset excess spending in a financial year against the unspent balance of the subsequent four financial years.
2. The Companies (Accounts) Rules, 2014, is associated with the creation of the Unspent CSR Account, which permits the utilization of these funds for administrative overheads exceeding the ten percent limit defined in the policy.
3. The 2020 amendment to the CSR framework provides for the direct transfer of unspent funds to the State Government's consolidated fund if the project is located within a single state for more than two consecutive years.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is incorrect. Statement 2 is incorrect. Statement 3 is incorrect.
Statement 1 is incorrect because the Companies Act allows offsetting excess CSR spending only against the requirement of the succeeding three financial years, not four. Statement 2 is incorrect as the Companies (CSR Policy) Rules, 2014, prohibit using Unspent CSR Account funds for administrative overheads, which are strictly capped at 5% of total CSR expenditure. Statement 3 is incorrect because unspent funds for ongoing projects must be transferred to a special 'Unspent CSR Account' within 30 days of the financial year-end, and if unspent after three years, they are transferred to the Fund specified in Schedule VII (e.g., PM CARES), not the State Government's consolidated fund.
Consider the following statements regarding Net profit calculation methodology for CSR spending:
1. The net profit calculation for CSR spending excludes any profit arising from overseas branches of the company.
2. Dividends received from other companies in India, which are covered under Section 135 of the Act, are excluded from the computation of net profit.
3. The net profit for CSR purposes is calculated in accordance with the provisions of Section 198 of the Companies Act, 2013.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is correct. Statement 2 is correct. Statement 3 is correct.
Under the Companies (CSR Policy) Rules, 2014, net profit for CSR is calculated per Section 198 of the Companies Act, 2013, which specifically excludes profits from overseas branches and dividend income received from other Indian companies that have already complied with Section 135 requirements to prevent double-counting. All three statements are accurate as they align with the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021, which clarify that the computation must exclude foreign branch profits and inter-corporate dividends to ensure the CSR spend is based on the standalone domestic operational profit.
Consider the following statements regarding CSR expenditure on capacity building and impact evaluation:
1. Capacity building expenditure under the CSR rules includes the purchase of fixed assets for company-owned schools, provided these assets are used for community outreach programs for a minimum of ten years.
2. Guidelines issued by the Ministry of Corporate Affairs in 2016 classify expenditure on administrative overheads as capacity building, allowing companies to claim a tax deduction of up to 2% of the total CSR outlay.
3. The Companies (CSR Policy) Amendment Rules, 2021, link the eligibility for impact assessment to the net worth of the company, setting the threshold at five hundred crore rupees for mandatory third-party audits.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is incorrect. Statement 2 is incorrect. Statement 3 is incorrect.
Statement 1 is incorrect because CSR funds cannot be used for the creation of capital assets for the company itself, and any asset created must be held by a Section 8 company or a registered public trust/society. Statement 2 is incorrect as administrative overheads are capped at 5% of total CSR expenditure, and CSR expenditure is not eligible for direct tax deductions under the Income Tax Act. Statement 3 is incorrect because the 2021 Rules mandate impact assessment for companies with a CSR obligation of ₹10 crore or more, or for projects with outlays of ₹1 crore or more, regardless of the company's net worth.
Consider the following statements regarding Role of the Ministry of Corporate Affairs in CSR monitoring:
1. The High Level Committee on Corporate Social Responsibility, constituted in 2018 under the chairmanship of Injeti Srinivas, recommended the transition of CSR from a 'comply or explain' regime to a penal provision framework.
2. Under the Companies (Amendment) Act, 2020, unspent CSR funds for ongoing projects are transferred to a special account titled 'Unspent CSR Account' within 30 days from the end of the financial year.
3. The National CSR Data Portal provides for the automated filing of Form CSR-1, which serves as the registration document for implementing agencies seeking to undertake projects funded by the Central Government.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is correct. Statement 2 is correct. Statement 3 is incorrect.
Statement 1 is correct as the 2018 Injeti Srinivas Committee recommended shifting from a 'comply or explain' approach to a penal regime to ensure stricter compliance. Statement 2 is correct because the Companies (Amendment) Act, 2020 mandates transferring unspent funds for ongoing projects to a dedicated 'Unspent CSR Account' within 30 days of the financial year's end. Statement 3 is incorrect because Form CSR-1 is used for the registration of implementing agencies with the Ministry of Corporate Affairs to undertake CSR activities, not specifically for projects funded by the Central Government.
Consider the following statements regarding CSR expenditure vs tax deductibility provisions:
1. Under the 2013 regulatory framework, companies with a turnover exceeding 1000 crore rupees report their CSR activities to the Ministry of Finance through the MCA21 portal.
2. The National CSR Data Portal, launched in 2018, functions as an autonomous body under the Securities and Exchange Board of India to monitor compliance with tax-exempt CSR projects.
3. The Finance Act of 2014 introduced a specific amendment to Section 80G of the Income Tax Act, which allows corporate entities to claim a 50 percent tax deduction on CSR outlays.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is incorrect. Statement 2 is incorrect. Statement 3 is incorrect.
Statement 1 is incorrect because CSR reporting is overseen by the Ministry of Corporate Affairs (MCA), not the Ministry of Finance, and applies to companies meeting specific thresholds (net worth of 500cr, turnover of 1000cr, or net profit of 5cr). Statement 2 is incorrect as the National CSR Data Portal is a digital platform managed directly by the MCA, not an autonomous body under SEBI. Statement 3 is incorrect because the Income Tax Act does not provide for tax deductions on CSR expenditure; the government has explicitly clarified that CSR expenses are not tax-deductible under Section 37 of the Income Tax Act, and Section 80G benefits do not apply to mandatory CSR outlays.
Consider the following statements regarding Treatment of CSR surplus and its reinvestment:
1. Under the framework of the 2021 Amendment, surplus CSR funds are eligible for transfer to the company's general reserve account if the board passes a resolution within ninety days of the project completion.
2. The Companies Act 2013 specifies that surplus funds generated from CSR projects are to be plowed back into the same project or transferred to the Unspent CSR Account.
3. The 2014 CSR Rules established a provision where surplus funds from CSR projects are treated as operational revenue, allowing them to be offset against the CSR expenditure of the subsequent financial year.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 2 is correct. Statement 1 is incorrect. Statement 3 is incorrect.
Statement 2 is correct because the Companies (CSR Policy) Amendment Rules, 2021 mandate that any surplus arising from CSR activities must be plowed back into the same project or transferred to the Unspent CSR Account and spent in pursuance of the CSR policy and annual action plan. Statement 1 is incorrect as surplus CSR funds cannot be transferred to the general reserve account, as CSR funds are not business profits. Statement 3 is incorrect because the 2021 Rules explicitly state that surplus from CSR activities shall not form part of the business profit of a company, and thus cannot be treated as operational revenue.
Consider the following statements regarding Prohibition of CSR activities for personal benefit or employee welfare:
1. The High Level Committee on Corporate Social Responsibility, 2018, recommended that CSR funds should not be utilized for activities that are a normal part of business operations or employee welfare programs.
2. According to the MCA notification dated 22 January 2021, CSR projects or programs or activities that benefit only the employees of the company and their families are ineligible for CSR credit.
3. Rule 2(1)(d) of the Companies (CSR Policy) Rules, 2014, defines CSR expenditure to exclude any activity undertaken in pursuance of the normal course of business of the company.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is correct. Statement 2 is correct. Statement 3 is correct.
Statement 1 is correct as the 2018 High Level Committee recommended excluding activities exclusively for employees to ensure CSR remains a public-facing social responsibility. Statement 2 is correct because the 2021 MCA amendments explicitly codified that projects benefiting only employees and their families do not qualify as CSR. Statement 3 is correct as Rule 2(1)(d) of the Companies (CSR Policy) Rules, 2014, mandates that CSR must be distinct from 'normal course of business' activities to prevent companies from claiming routine operational expenses as social welfare.
Consider the following statements regarding Treatment of ongoing projects under CSR rules:
1. The National CSR Data Portal records indicate that projects initiated under the 2013 framework are eligible for a five-year extension if the company demonstrates a 15 percent increase in annual turnover.
2. The regulatory framework for CSR expenditure includes provisions for the adjustment of excess CSR spending against the obligation of the succeeding three financial years, subject to a board resolution passed in the first quarter.
3. The Companies (CSR Policy) Rules categorize 'ongoing projects' as those with a multi-year timeline not exceeding four years, excluding the financial year in which the project was commenced.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is incorrect. Statement 2 is incorrect. Statement 3 is incorrect.
Statement 1 is incorrect as there is no provision linking CSR project extensions to a 15 percent increase in turnover. Statement 2 is incorrect because while excess CSR spending can be set off against the obligation of the succeeding three financial years, it does not require a board resolution to be passed specifically in the first quarter. Statement 3 is incorrect because the Companies (CSR Policy) Rules define an 'ongoing project' as a multi-year project having a timeline not exceeding three years, excluding the financial year in which it was commenced.
Consider the following statements regarding Penal provisions for non-compliance with CSR mandates:
1. Rule 8 of the Companies (CSR Policy) Rules, 2014, provides that companies with an average CSR obligation of ten crore rupees or more in the three preceding financial years are required to undertake impact assessment for projects with outlays of one crore rupees or more.
2. The 2014 CSR Rules allow companies to carry forward excess CSR expenditure to the subsequent three financial years and provide for an automatic tax deduction on the total amount spent under Section 80G of the Income Tax Act.
3. The officer in default for non-compliance with CSR provisions faces a penalty of one-tenth of the amount required to be transferred by the company or two lakh rupees, whichever is less.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is correct. Statement 3 is correct. Statement 2 is incorrect.
Statement 1 is correct as per the Companies (CSR Policy) Amendment Rules, 2021, which mandates impact assessment for companies meeting these specific financial thresholds. Statement 3 is correct because the Companies (Amendment) Act, 2020, revised the penalty for officers in default to the lesser of one-tenth of the required CSR amount or two lakh rupees. Statement 2 is incorrect because while companies can set off excess CSR expenditure against obligations for the next three financial years, the law does not provide for an automatic tax deduction under Section 80G for CSR spending; in fact, CSR expenditure is explicitly excluded from tax deductions under Section 80G.
Consider the following statements regarding CSR activities in aspirational districts and local areas:
1. The 2021 CSR Amendment Rules allow companies to carry forward unspent CSR amounts for a period of five years if the funds are directed toward projects located in notified aspirational districts.
2. As per the Ministry of Corporate Affairs circular dated May 20, 2020, companies are permitted to contribute to the PM CARES Fund, which is eligible for CSR spending under Schedule VII.
3. The Ministry of Corporate Affairs notification of 2014 refers to the inclusion of 'slum area development' under Schedule VII, which allows companies to count infrastructure projects in aspirational districts as direct CSR compliance.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 2 is correct. Statement 1 is incorrect. Statement 3 is incorrect.
Statement 2 is correct because the Ministry of Corporate Affairs (MCA) issued a circular on May 20, 2020, clarifying that contributions to the PM CARES Fund qualify as valid CSR expenditure under item (viii) of Schedule VII. Statement 1 is incorrect because the Companies (CSR Policy) Amendment Rules, 2021, mandate that unspent CSR funds for ongoing projects must be transferred to a special account within 30 days and utilized within three financial years, not five. Statement 3 is incorrect because while 'slum area development' is listed under Schedule VII, it does not automatically classify all infrastructure projects in aspirational districts as CSR; such projects must specifically align with the activities enumerated in Schedule VII of the Companies Act, 2013.
Consider the following statements regarding CSR expenditure on capacity building and impact evaluation:
1. The CSR Policy Rules of 2014 allow companies to engage international non-governmental organizations for impact evaluation, provided the agency has been registered with the NITI Aayog's Darpan portal for at least five years.
2. The 2021 amendments allow companies to utilize up to 10% of their CSR budget for capacity building of their own personnel, including the development of specialized CSR software and internal accounting frameworks.
3. Impact assessment reports for CSR projects are governed by the Indian Accounting Standard 115, which provides the framework for reporting social returns on investment to the Ministry of Finance.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is incorrect. Statement 2 is incorrect. Statement 3 is incorrect.
All three statements are incorrect because the Companies (CSR Policy) Rules do not mandate NITI Aayog registration for international agencies, nor do they permit CSR funds for internal personnel capacity building, which is capped at 5% of the total CSR expenditure for the year. Furthermore, impact assessment reports are governed by the Companies (CSR Policy) Amendment Rules, 2021, which require reports to be annexed to the annual CSR report rather than following Indian Accounting Standard 115 or reporting to the Ministry of Finance.
Consider the following statements regarding Transfer of unspent funds to Fund specified in Schedule VII:
1. Section 135(6) of the Companies Act, 2013 provides that any amount remaining unspent pursuant to an ongoing project shall be transferred to a special account within thirty days from the end of the financial year.
2. The Companies Act, 2013 allows for the transfer of unspent CSR funds to the Investor Education and Protection Fund, provided the board of directors passes a resolution within ninety days of the financial year-end.
3. The Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 specify that unspent CSR funds related to ongoing projects are to be transferred to a 'Unspent Corporate Social Responsibility Account' opened by the company.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is correct. Statement 3 is correct. Statement 2 is incorrect.
Statement 1 is correct as Section 135(6) mandates transferring unspent funds for ongoing projects to a special 'Unspent Corporate Social Responsibility Account' within 30 days of the financial year-end. Statement 3 is correct because the 2021 Amendment Rules formalize this requirement for ongoing projects to ensure transparency and ring-fencing of funds. Statement 2 is incorrect because unspent funds not related to ongoing projects must be transferred to a Fund specified in Schedule VII (such as the PM CARES Fund) within six months of the financial year-end, not to the Investor Education and Protection Fund.
Consider the following statements regarding Section 135 of the Companies Act 2013 applicability criteria:
1. Section 135 of the Companies Act 2013 applies to companies having a net worth of rupees 500 crore or more during the immediately preceding financial year.
2. Companies with a turnover of rupees 1000 crore or more during the immediately preceding financial year fall under the ambit of CSR provisions.
3. The Companies Act 2013 provides for a net worth threshold of rupees 1000 crore, which aligns with the 2014 notification regarding the initial implementation of CSR reporting standards.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is correct. Statement 2 is correct. Statement 3 is incorrect.
Under Section 135 of the Companies Act, 2013, companies are mandated to comply with CSR provisions if they meet any of the three criteria during the immediately preceding financial year: a net worth of Rs 500 crore or more, a turnover of Rs 1,000 crore or more, or a net profit of Rs 5 crore or more. Statements 1 and 2 are correct as they accurately reflect the statutory thresholds for net worth and turnover, respectively. Statement 3 is incorrect because the net worth threshold remains Rs 500 crore, and there is no provision in the Act setting a Rs 1,000 crore net worth threshold for CSR applicability.
Consider the following statements regarding CSR spending on COVID-19 related relief measures:
1. Companies are permitted to include the promotion of healthcare, including preventive healthcare and sanitation, under Item (i) of Schedule VII of the Companies Act, 2013.
2. The Ministry of Corporate Affairs issued a circular on 23 March 2020, clarifying that spending CSR funds for COVID-19 relief activities qualifies as an eligible activity.
3. The Companies Act, 2013, provides for the inclusion of disaster management under Item (xii) of Schedule VII, which was originally introduced by the 2013 amendment to cover pandemic-related financial aid.
How many of the statements given above are correct?
- Only one
- Only two
- All three
- None
Explanation: Statement 1 is correct. Statement 2 is correct. Statement 3 is incorrect.
Statement 1 is correct as Schedule VII, Item (i) of the Companies Act, 2013, explicitly covers the promotion of healthcare, including preventive healthcare and sanitation. Statement 2 is correct because the Ministry of Corporate Affairs issued a circular on 23 March 2020 clarifying that spending CSR funds for COVID-19 relief activities is an eligible CSR activity. Statement 3 is incorrect because while disaster management is covered under Item (xii) of Schedule VII, it was part of the original 2013 Act and not introduced by a subsequent amendment specifically for pandemic-related financial aid.