ETCFO, August 31, 2026
The proposed corporate law overhaul may ease CSR compliance for thousands of companies, but a dissent note has raised concerns over weaker board level scrutiny of corporate social spending. The proposed changes would raise both the CSR applicability and separate committee thresholds, prompting questions over accountability and oversight.
Proposed changes to India’s corporate social responsibility regime have triggered a sharp dissent over accountability, with a member of the parliamentary panel warning that raising the threshold for a separate CSR committee could weaken independent oversight of corporate social spending.
The Corporate Laws (Amendment) Bill, 2026 proposes to raise the net profit threshold for CSR applicability from Rs 5 crore to Rs 10 crore. It also proposes to increase from Rs 50 lakh to Rs 1 crore the annual CSR expenditure threshold below which a separate CSR committee is not required.
The parliamentary committee examining the Bill has recommended retaining both changes.
The dissent recorded in the report, however, argues that the higher threshold for a separate CSR committee would remove an existing accountability mechanism without providing an alternative monitoring system.
Dissent flags accountability gap
The dissent note says that raising the CSR committee threshold “without introducing any monitoring mechanism reduces accountability for CSR expenditure”.
It further says companies that would no longer be required to constitute a CSR committee could “continue to spend significant amounts under CSR”, while the Bill does not provide an independent mechanism to ensure that the funds reach intended beneficiaries or are used for genuine public welfare.
The dissent recommends that CSR committees be made answerable to an independent body that periodically reviews whether CSR funds have been utilised for the purposes intended under the Companies Act.
It also calls for supervision “to prevent CSR funds from being used in a manner that secures quid pro quos or regulatory advantages for the contributing companies”.
11,204 companies could exit CSR regime
The proposed increase in the net profit threshold is estimated to take 11,204 companies outside the mandatory CSR regime. Data provided by the Ministry of Corporate Affairs to the committee showed that these companies would have had an estimated CSR obligation of Rs 1,281.67 crore in 2025 26 under the existing threshold.
The proposed change would affect companies that meet the CSR applicability test through the net profit criterion but have net profit below Rs 10 crore, provided they do not meet either of the other statutory thresholds.
Under Section 135 of the Companies Act, 2013, CSR provisions currently apply to companies meeting any one of three conditions: net worth of Rs 500 crore or more, turnover of Rs 1,000 crore or more, or net profit of Rs 5 crore or more.
The Bill proposes to raise only the net profit threshold to Rs 10 crore.
The committee has supported the change on the ground that revising the threshold would allow smaller companies to devote greater resources to business expansion and operational efficiency while keeping the CSR framework focused on companies with relatively greater financial capacity.
CSR committee threshold rises to Rs 1 crore
The Bill separately proposes to amend Section 135(9), under which a company whose CSR amount to be spent does not exceed Rs 50 lakh is not required to constitute a CSR committee, with the board performing the committee’s functions.
The proposed amendment raises this threshold to Rs 1 crore.
The provision also states that the threshold could subsequently be increased further through prescription.
This creates a distinction between the threshold determining whether a company comes within the CSR regime and the threshold determining whether it must have a separate CSR committee. The dissent specifically questions the latter change, arguing that companies could continue to undertake substantial CSR spending without the independent oversight provided by a separate committee.
Government exemption power also questioned
The committee has separately objected to the proposed power of the government to exempt classes of companies from CSR requirements.
The Bill had proposed that prescribed classes of companies meeting prescribed conditions could be exempted from compliance with Section 135.
The report described the proposed power as “broad and lacks statutory guidance, thereby amounting to excessive delegation of legislative power”.
It recommended deletion of the words “as may be prescribed” from the provision.
The committee’s intervention is separate from the CSR committee threshold, which continues to contain the words “or such higher amount as may be prescribed”.
Dissent seeks deletion of CSR clause
The disagreement extends beyond the proposed monitoring safeguards.
One of the two formal dissent notes attached to the report seeks deletion of Clause 43 of the Bill, which contains the proposed amendments to Section 135 dealing with CSR.
The dissent argues that the proposed changes should not dilute existing accountability mechanisms without establishing equivalent safeguards for monitoring CSR expenditure.
The two dissent notes were submitted by Congress MP Varun Chaudhry and nominated Rajya Sabha member Menaka Guruswamy.
Chaudhry’s note calls for Clause 43 to be dropped. It also cites concerns raised by stakeholders that “ease of doing business may not lead to ease of doing fraud”.
Guruswamy’s dissent focuses on the accountability implications of raising the CSR committee threshold and on the wider use of delegated legislation in the Bill.
Unspent CSR transfer window extended
The Bill also proposes to give companies more time to transfer unspent CSR amounts relating to ongoing projects.
The period would be extended from 30 days to 90 days.
The proposed changes form part of a wider corporate law overhaul aimed at reducing compliance requirements and decriminalising several procedural defaults under the Companies Act, 2013 and the Limited Liability Partnership Act, 2008.
The Corporate Laws (Amendment) Bill was introduced in the Lok Sabha on March 23 and referred to the parliamentary committee the same day.
The committee presented its report to Parliament on August 3.
The Bill has not yet become law.
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