Verification of CSR spending
under Section 135, Companies Act
CSR Audit
Quick Reference for Your Business
Section 135 Spend Verification – everything you need to know about CSR Audit.
01
What It Is / When Needed
Confirms
2% spend, eligible Schedule VII activities and reporting
Checks implementing agencies
are CSR-1 registered
Impact assessment
required if average CSR obligation ≥ ₹10 crore
02
What The Audit Checks
| Area | Checks |
|---|---|
| Spend amount | 2% of average net profit (Sec 198), last 3 years |
| Eligibility | Activities fall within Schedule VII |
| Agency check | Implementing NGO is CSR-1 registered (12A + 80G) |
| Unspent funds | Transferred correctly (30 days / 6 months) |
03
Why It Matters
CSR default (Sec 135)
Company: ₹1 crore or 2× the unspent amount, whichever is less.
Officer: ₹2 lakh or 1/10th, whichever is less.
Note: A CSR audit keeps your spend defensible. It confirms the money went to eligible Schedule VII activities through properly registered agencies, and that any unspent amount was transferred on time — avoiding the penalties that follow a CSR default.
04
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