Government Proposes Lower CSR Thresholds and Mandatory CSR-Experienced Director

Most Indian companies treat CSR as a checkbox exercise: meet the threshold, spend 2%, file the report, move on.

That’s about to change.

The Companies (Amendment) Bill, 2025, proposes lower CSR applicability thresholds and introduces a mandatory CSR-experienced director on every CSR Committee. If approved, thousands of mid-sized companies that were previously outside the CSR net will now be legally required to plan, govern, and report CSR spend at the board level.

This isn’t just a compliance update.
It’s a structural shift in how CSR is expected to work in India, from routine spending to strategic, impact-driven governance.

In this guide, you’ll understand what’s changing, who will be affected, and the practical steps boards and CFOs should take to prepare for the revised CSR regime.

Key Takeaways

• CSR thresholds are proposed to be lowered to ₹100 crore in net worth, ₹500 crore in turnover, or ₹3 crore in net profit, bringing many mid-sized companies under mandatory CSR.
• Every CSR Committee must include at least one CSR-experienced director to strengthen governance and impact oversight.
• First-time CSR companies must budget 2% of average net profits, form a CSR Committee, and adopt a formal CSR Policy.
• Boards and CFOs should reassess eligibility now and prepare for committee restructuring, budgeting, and enhanced disclosures.

What Is the Government Trying to Change?

The Government’s objective is two-fold:

1. Expand the CSR net by lowering eligibility thresholds.
2. Improve the quality of CSR spending through stronger board-level governance.

The proposal signals a clear policy intent: CSR is no longer just about spending 2%; it is about planning, execution, monitoring, and outcomes.

Once notified, the revised thresholds will apply based on the immediately preceding financial year, making early assessment critical for boards, CFOs, and compliance teams.

Current CSR Framework Under Section 135

Under the existing Section 135 of the Companies Act, 2013, CSR applies to companies that meet any one of the following criteria in the previous financial year:

• Net worth: ₹500 crore or more
• Turnover: ₹1,000 crore or more
• Net profit: ₹5 crore or more

Such companies must:

• Constitute a CSR Committee
• Frame a CSR Policy
• Spend at least 2% of the average net profits of the last three years on eligible CSR activities

Notably, the current law does not require any CSR expertise among CSR Committee members. In practice, this has often reduced CSR to a reporting and compliance activity rather than a value-driven initiative.

Proposed CSR Thresholds: Old vs New

The Companies (Amendment) Bill, 2025, proposes substantially lower thresholds, thereby significantly expanding the scope of CSR.

Proposed CSR Applicability Thresholds

What This Means in Practice

Companies that were previously outside CSR—especially those with:

• Net worth between ₹100–500 crore
• Turnover between ₹500–1,000 crore
• Net profit between ₹3–5 crore

will now be mandatorily required to implement CSR frameworks, including budgeting, governance, and reporting.

For many, this will be their first formal CSR obligation.

Mandatory CSR-Experienced Director: A Key Governance Shift

One of the most significant changes is the proposal to mandate at least one CSR-experienced director on the CSR Committee.

What Qualifies as CSR Experience?

The Bill refers broadly to experience in:

• CSR planning and strategy
• Project implementation
• Monitoring and impact assessment
• Social sector or development work

The CSR Committee must still meet existing composition norms, including:

• Minimum number of directors
• Inclusion of an independent director, where applicable

Why This Matters

This requirement aims to ensure that CSR decisions are:

• Better informed
• Strategically aligned
• Outcome-oriented

CSR is clearly being repositioned as a board-level responsibility requiring specialised expertise, not just administrative oversight.

Why the Government Is Lowering Thresholds and Raising Standards

Expanding CSR Participation

By lowering thresholds, the Government intends to:

• Mobilise more private capital for social development
• Involve mid-sized companies with strong regional presence
• Deepen CSR’s grassroots impact

Improving CSR Quality

Requiring CSR expertise at the board level is expected to:

• Improve project selection and NGO partnerships
• Strengthen monitoring and impact measurement
• Enhance transparency and accountability

Together, these changes push CSR away from a “spend-and-disclose” model toward long-term, measurable social value creation.

Impact on Companies Newly Covered by CSR

Companies entering the CSR regime for the first time will need to act quickly.

Immediate Requirements

• Constitute or reconstitute the CSR Committee
• Draft and approve a CSR Policy
• Identify eligible CSR activities and partners
• Budget for the mandatory 2% spend

Financial and Strategic Implications

• CSR spending will need to be factored into profit planning and cash flows
• Capital allocation decisions may need adjustment
• Well-designed CSR can enhance brand value, stakeholder trust, and employee engagement

Early preparation can turn CSR from a cost into a strategic reputational and ESG asset.

Key Action Points for Boards, CFOs, and Company Secretaries

1. Reassess CSR Applicability Review the latest financials against the proposed thresholds to identify early exposure.
2. Reconfigure the CSR Committee Plan for the induction of a CSR-experienced director and ensure the committee composition complies with the amended law.
3. Budget and Plan the CSR Spend: Estimate the 2% obligation and integrate it into annual budgets and ESG strategy.
4. Strengthen Governance and Documentation. Implement policies, partner due diligence, monitoring systems, and reporting frameworks that can withstand regulatory and audit scrutiny.

Finding and Onboarding a CSR-Experienced Director

Boards may meet the new requirement by:

• Appointing an independent director with CSR or development sector experience
• Inducting professionals from NGOs, CSR advisory firms, or impact consulting backgrounds
• Leveraging existing directors with demonstrable CSR involvement (where appropriate)

Beyond the appointment, companies should clearly define the director’s role in CSR strategy, risk assessment, and impact reporting to utilise their expertise fully.

Compliance, Reporting, and CSR-1 Alignment

The proposed changes operate alongside existing compliance requirements, including:

• CSR disclosures in the Board’s Report
• Website publication of CSR Policy
• NGO registration and reporting under CSR-1

Audit functions—statutory, internal, and secretarial—are expected to intensify focus on CSR governance, fund utilisation, and impact outcomes. Non-compliance can result in financial penalties and reputational damage, making proactive compliance essential.

Strategic Opportunities for Companies and NGOs

For Companies

Expanded CSR obligations offer an opportunity to:

• Align CSR with core business strengths
• Support ESG, sustainability, and risk management goals
• Build long-term social programmes with real stakeholder impact

For NGOs and Implementation Partners

Lower thresholds mean:

• A larger base of first-time corporate CSR donors
• Higher expectations on governance, reporting, and impact measurement
• Greater opportunity for professional, long-term partnerships

Bottom Line

The Companies (Amendment) Bill, 2025, fundamentally reshapes India’s CSR landscape. Lower thresholds will expand CSR coverage, while the requirement of a CSR-experienced director elevates governance and accountability.

For boards and management teams, the key challenge is not just compliance—but building credible, strategic, and impact-driven CSR programmes that align with business values and national priorities.