MCA has issued a FAQ dated August 25, 2021

Earlier the Ministry has notified the amendments in Section 135 of the Act as well in the CSR Rules on 22nd January 2021 . This FAQ seems to be a clarification on the doubts to their notification. I will take one example where Spending and Utilisation has been made very clear through this FAQ.

Many Companies used to cut a cheque to the implementation agency (NGO) and take cover for having spend the amount; whereas the implementing agency may not have spent the CSR amount as on March 31, 2021. This practice may be based on a liberal interpretation of the notification of January 2021.

But in the FAQ in para 7.4 there is a clarification that may be a big googly for companies that are preparing the Board's Report for the year ending March 31, 2021.

Section 135(5) of the Act prescribes minimum spending obligation for the company. The company may fulfil its CSR spending obligation directly by itself or though engaging an implementing agency. The implementing agency acts on behalf of the company and mere disbursal of funds for implementation of a project does not amount to spending unless the implementing agency utilises the whole amount.

This means if the Company and the implementing agency both do not actually spend or have not spend the CSR amount on or before March 31, 2021 then there may be a necessity to transfer this amount to the designated account (PM Relief fund and others).

FAQ on FAQ if the project is not an ongoing project but a one time project can be:

1. If the NGO has spent part amount on a project
2. If the NGO has not spent the amount but does not have the amount to give it back to company
3. If NGO has used some amount on administrative expenses

There are so many questions ....