How to Write a CSR Report

What is the CSR Annual Report?

Every company meeting the thresholds under Section 135 of the Companies Act, 2013 must prepare an annual report on its Corporate Social Responsibility activities. This report is prepared in the Annexure II format prescribed under Rule 8(1) of the Companies (CSR Policy) Rules, 2014, and is annexed to the Board's report filed under Section 134(3)(o) of the Act.

The Annexure II format applies to financial years commencing on or after April 1, 2020. It replaced the earlier abbreviated format and substantially expanded the disclosure requirements, bringing in project-level detail, impact assessment summaries, and a clear breakdown of spent and unspent amounts.

For NGOs, understanding this format is not optional reading. If your organisation acts as an implementing agency for a company's CSR projects, the data you submit — project outlay, cumulative spend, sector codes, and impact findings — flows directly into the company's Annexure II report. Reporting that does not map cleanly to the prescribed structure is a common reason for delayed fund release or withheld tranches.

The Three CSR Reporting Channels

Companies covered under Section 135 face three distinct, parallel reporting obligations. They are not substitutes for one another, and each serves a different audience:

1. Annual report on CSR (Annexure II) — annexed to the Board's report and circulated to shareholders as part of the Annual Report. This is the narrative, project-level disclosure.
2. Form CSR-2 — filed with the Registrar of Companies (RoC), typically along with the financial statements. This is the structured statutory return.
3. Website disclosure under Rule 9 — the company must publish the composition of its CSR Committee, its CSR Policy, and the projects approved by the board on its own website.

A company that files CSR-2 but fails to annex the Annexure II report to the Board's report, or that omits the website disclosure, is in non-compliance. All three channels must be satisfied independently.

Annexure II Format Explained

The Annexure II format is organised into nine sections. Each is mandatory where applicable, and the report must be signed by a director and the company secretary (where applicable).

1. Brief outline of the CSR policy

The company must provide a brief outline of its CSR policy, including an overview of the projects and programs undertaken during the year, and a web-link where the full CSR policy can be accessed. The outline should be concise but must cover the thrust areas and the approach adopted.

2. Composition of the CSR Committee

This section lists the names and designations of all CSR Committee members, the number of CSR Committee meetings held during the year, and the number of meetings attended by each member. The committee must have a minimum of three directors, including at least one independent director.

3. Web-link for disclosures

The company must provide the web-link where details of the CSR Committee composition, the CSR Policy, and the projects approved by the board are disclosed on the company's website. This cross-references the Rule 9 website disclosure obligation.

4. Executive summary of Impact Assessment

If impact assessment is applicable, the company must include an executive summary of the assessment report. This requirement applies to projects with an outlay of Rs 1 crore or more, for companies whose average CSR obligation in the three preceding financial years is Rs 10 crore or more, and where the project has been completed at least one year before the start of the financial year.

5. Financial details of CSR obligation

This section captures the computation of the company's CSR obligation for the year:

• (a) Average net profit of the preceding three years
• (b) Two percent of the average net profit (the prescribed CSR obligation)
• (c) Surplus from the previous year, if any (including set-off)
• (d) Set-off amount, if any
• (e) Total CSR obligation for the financial year

6. Amount spent on CSR

The company must report the total amount spent, broken down into:

• (a) Amount spent on CSR projects
• (b) Administrative overheads (capped at 5% of total CSR expenditure)
• (c) Amount spent on impact assessment
• (d) Total amount spent

7. Details of CSR amount spent and unspent

This section requires a table showing the total amount spent, the unspent amount, the amount transferred to an Unspent CSR Account (for ongoing projects), and the amount transferred to a fund specified in Schedule VII (for non-ongoing projects). The dates of transfer must also be disclosed.

8. Details of ongoing projects

For each ongoing project, the company must disclose the project name, the total project outlay, the cumulative amount spent to date, the amount spent in the current financial year, and the remaining balance. This is a project-level disclosure and is where implementing agency data is most directly reflected.

9. Details of implementing agencies

The company must list each implementing agency used during the year, along with the agency's CSR Registration Number (issued via Form CSR-1), the sector covered, the project name, and the amount allocated or spent through that agency. This is why a valid CSR-1 registration is a prerequisite for any NGO receiving CSR funds.

CSR Committee Composition Requirements

The CSR Committee is the board-level body responsible for formulating and recommending the CSR Policy, monitoring its implementation, and approving project-level allocations. Under Section 135, the committee must have a minimum of three directors, with at least one independent director.

For unlisted public companies and private companies, the independent director requirement applies where the company is otherwise required to appoint an independent director under the Act. Where a company is not required to have an independent director, the committee may be formed with two or more directors, but the three-director minimum still applies where applicable.

The committee must meet at least as often as required to discharge its responsibilities, and the number of meetings held and attended by each member is disclosed in Annexure II.

Impact Assessment Requirements

Impact assessment is not required for every CSR project. The obligation is triggered only when all of the following conditions are met:

• The project has an outlay of Rs 1 crore or more.
• The company's average CSR obligation in the three preceding financial years is Rs 10 crore or more.
• The project has been completed at least one year before the start of the financial year in which the assessment is being reported.

Where applicable, the impact assessment must be conducted by an external agency or an in-house team, and an executive summary must be included in Annexure II. The full assessment report should be placed on the company's website.

Administrative Overheads Cap

Administrative overheads — the costs of overheads, monitoring, and reporting — cannot exceed 5% of the total CSR expenditure for the financial year. This is a hard cap under the CSR Policy Rules. Direct project implementation costs and impact assessment costs are excluded from this 5% limit and are reported separately in Annexure II.

Companies that exceed the 5% cap risk the excess being treated as non-CSR expenditure, which can affect the computation of unspent amounts and trigger compliance questions from the RoC.

How to Handle Unspent CSR Amounts

The treatment of unspent CSR amounts depends on whether the unspent funds relate to an ongoing project:

• Ongoing project: The unspent amount must be transferred to an Unspent CSR Account within 30 days of the end of the financial year. The amount must then be spent within three years. If it remains unspent after three years, it must be transferred to a fund specified in Schedule VII.
• Not an ongoing project: The unspent amount must be transferred to a fund specified in Schedule VII within six months of the end of the financial year.

Both scenarios must be disclosed in Annexure II, including the amount transferred, the date of transfer, and the name of the fund or account.

Website Disclosure Requirements

Under Rule 9 of the Companies (CSR Policy) Rules, 2014, every company covered under Section 135 must disclose the following on its website:

• The composition of the CSR Committee.
• The CSR Policy.
• The projects approved by the board.

This disclosure must be maintained and updated regularly. A stale or broken link is treated as non-disclosure. The web-link provided in Annexure II (Section 3) must point to a live, accessible page containing all three elements.

Common Mistakes and Edge Cases

Several recurring errors appear in CSR annual reports filed under Annexure II:

• Mismatched figures between Annexure II, Form CSR-2, and the audited financial statements. The three must reconcile.
• Missing or invalid CSR Registration Numbers for implementing agencies. Every agency listed must have a valid CSR-1 registration.
• Incorrect classification of administrative overheads, leading to a breach of the 5% cap.
• Failure to transfer unspent amounts within the prescribed timelines.
• Incomplete ongoing project details, particularly the cumulative spend and remaining balance columns.
• Missing impact assessment summary where the thresholds are met.

Guardrails and Important Points

• The Annexure II report must be signed by a director and the company secretary (where one is appointed).
• All amounts must be reported in Indian Rupees and reconcile with the audited financial statements.
• Sector codes must align with the activities listed in Schedule VII of the Companies Act, 2013.
• The web-link provided for the CSR Policy and project disclosures must be live and accessible at the time of filing and throughout the year.
• Implementing agencies must be registered with the RoC via Form CSR-1 and must not have been barred from receiving CSR funds.
• Surplus arising out of CSR activities must be spent on CSR and cannot be treated as profit.

Why NGOs Should Understand CSR Reporting

For NGOs, the Annexure II format is not a company-only concern. The data that implementing agencies submit — project outlay, cumulative spend, sector classification, and impact findings — is the raw material for the company's annual report. NGOs that understand the format can:

• Align their internal reporting templates with the structure the company needs, reducing back-and-forth at year-end.
• Provide project-level financial data that maps cleanly to Annexure II Sections 8 and 9.
• Prepare impact assessment summaries that meet the executive summary requirement in Section 4.
• Avoid the compliance gaps that lead to delayed fund release or withheld tranches.

In practice, the NGOs that receive repeat CSR funding are the ones that make the company's reporting easy. Understanding Annexure II is a direct way to do that.