Impact Assessment explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Reporting that money was spent is easy. Rule 8 asks the larger spenders to establish whether it did anything.
The requirement
Rule 8 for CSR reporting suggests that the Companies with average CSR obligation of 10 Crore or more in the 3 immediately preceding financial years shall undertake impact assessment through an independent agency for projects of 1 crore or more which have been completed not less than 1 year before undertaking the impact study.
Further, the impact assessment reports shall be placed before the Board and shall be annexed to the annual report on CSR.
Each threshold answers a different objection to mandating outcome measurement.
Ten crore of average obligation — the company threshold. Impact assessment costs money, and requiring it of every covered company would divert CSR funds into consultancy. Averaging over three immediately preceding financial years also stops a single exceptional year from pulling a company in or out.
One crore per project — the project threshold. A large spender may run many small interventions; assessing each would be disproportionate. The rule targets the projects big enough to justify the study.
One year since completion — the timing threshold, and the most important of the three. Impact is not visible at handover. A school building, a water system or a training programme produces effects over the following year; assessing it on the day it finished would measure delivery, not impact.
Note the requirement for an independent agency. A self-assessment by the implementing agency that ran the project has an obvious interest in the answer, and the same is true of the company's own CSR function.
Then the governance step that gives it teeth: the reports are placed before the Board and annexed to the annual report on CSR — so the findings reach the directors and then the public, rather than sitting with the CSR team.
For a director this is a rare opportunity. Very little else in the reporting framework tells the board whether an expenditure achieved its purpose, and an impact assessment that concludes a project achieved little is a legitimate basis for redirecting next year's plan.
The three tests
| Test | Threshold | Measured over |
|---|---|---|
| Company | Average CSR obligation of 10 crore or more | 3 immediately preceding financial years |
| Project | 1 crore or more | Per project |
| Timing | Completed not less than 1 year before the study | Since completion |
All three must be satisfied. A company below the ten crore average is outside the requirement even for a large project; a qualifying company need not assess a project below one crore, or one completed last month.
Where it connects to the plan
The annual action plan under Rule 5 must include details of need and impact assessment, if any, for the projects undertaken by the company. The two work as a pair: need assessment establishes that an intervention is required before funds are committed; impact assessment establishes whether it worked after they were spent.
A CSR programme that runs both is planning on evidence. One that runs neither is allocating money on assertion.
What the board should ask
- Does the company cross the three-year average obligation threshold?
- Which completed projects meet the one crore and one year tests?
- Who is the independent agency, and how was it selected?
- What did the assessment conclude, and does the next plan reflect it?
- Was the report annexed to the annual report on CSR?
Common mistakes
- Testing the company threshold on a single year rather than a three-year average.
- Commissioning the impact assessment from the implementing agency.
- Assessing projects immediately on completion.
- Receiving the report and leaving the following year's plan unchanged.