Rules 3 and 4 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.
Rule 3 says which companies must comply with section 135 and the CSR Rules, including holding and subsidiary companies and foreign companies. Rule 4 says who may carry out CSR projects, requires implementing entities to register in Form CSR-1, and gives the Board its monitoring duties. This article is as amended up to G.S.R. 415(E) dated 27 May 2026 per the MCA e-book; Form CSR-1 was substituted by G.S.R. 452(E) of 7 July 2025, in force from 14 July 2025. Later amendments should be checked before you rely on it. For CSR registration of an entity, see our 12A, 80G and CSR registration service.
Every company that meets the section 135(1) criteria, including its holding or subsidiary and a foreign company with a branch or project office in India, must comply. The Board ensures CSR is carried out by the company itself or through the printed implementing entities. Every implementing entity must register in Form CSR-1 with effect from 1 April 2021 and receives a unique CSR Registration Number. The CFO or the person responsible for financial management certifies that funds were used as approved.
Rule 3: who must comply
Rule 3(1). Every company, including its holding or subsidiary, and a foreign company (section 2(42)) having its branch office or project office in India, which fulfils the criteria in section 135(1) must comply with section 135 and the rules. The first proviso says the net worth, turnover or net profit of a foreign company is computed from its balance sheet and profit and loss account prepared under section 381(1)(a) and section 198 of the Act.
Second proviso. A company having any amount in its Unspent Corporate Social Responsibility Account under section 135(6) must constitute a CSR Committee and comply with sub-sections (2) to (6) of section 135. This was inserted in 2022. Sub-rule (2), the relief for a company ceasing to meet the criteria, was omitted in 2022 and carries no requirement now. The criteria themselves are in section 135 of the Companies Act, 2013.
Rule 4(1): who may implement CSR
The Board shall ensure that CSR activities are undertaken by the company itself or through:
| Clause | Implementing entity |
|---|---|
| (a) | A company established under section 8 of the Act, or a registered public trust or society, with the printed income-tax exemption or registration (section 10(23C) sub-clauses (iv), (v), (vi) or (via), or section 12A with approval under section 80G of the Income Tax Act, 1961), established by the company, singly or with another company |
| (b) | A section 8 company or registered trust or society established by the Central Government or a State Government |
| (c) | Any entity established under an Act of Parliament or a State legislature |
| (d) | A section 8 company, registered public trust or society with the same printed tax status and an established track record of at least three years in undertaking similar activities |
The Explanation to clause (c) says "entity" means a statutory body constituted under an Act of Parliament or State legislature to undertake activities covered in Schedule VII. The references to the Income Tax Act, 1961 are as printed; see our income-tax guides for the current provisions and check the current statute.
Rule 4(2): CSR-1 registration
- (a) Every entity covered under sub-rule (1) that intends to undertake any CSR activity must register itself with the Central Government by filing Form CSR-1 electronically with the Registrar, with effect from 1 April 2021. The proviso says this does not affect CSR projects or programmes approved before 1 April 2021.
- (b) Form CSR-1 is signed and submitted electronically by the entity and verified digitally by a Chartered Accountant in practice, a Company Secretary in practice or a Cost Accountant in practice.
- (c) On submission, a unique CSR Registration Number is generated automatically by the system.
Form CSR-1 was substituted by G.S.R. 452(E) of 7 July 2025, in force from 14 July 2025, so the e-form on the portal is the one to use. Our posts on CSR registration and the unique registration number, how to apply for CSR-1 and the Board resolution for registering an implementing agency cover the practice.
Rule 4(3) to (6): other powers and duties
| Sub-rule | What it says |
|---|---|
| 4(3) | A company may engage international organisations for designing, monitoring and evaluation of CSR projects or programmes as per its CSR policy, and for capacity building of its own personnel for CSR |
| 4(4) | A company may collaborate with other companies on projects or programmes so that the CSR committees of the respective companies can report separately on them |
| 4(5) | The Board must satisfy itself that funds disbursed were utilised for the purposes and in the manner approved, and the Chief Financial Officer or the person responsible for financial management shall certify to that effect |
| 4(6) | For an ongoing project, the Board monitors implementation against the approved timelines and yearwise allocation and may modify it for smooth implementation within the overall permissible time |
Rule 4(3) uses the term "international organisation" as defined in rule 2(1)(g); see our article on the definitions in rules 1 and 2.
Rule 4A in a line
Rule 4 also governs CSR through a zero coupon zero principal instrument, except sub-rules (5) and (6); see our article on rules 4A and 5.
A worked example
Crest Textiles Limited meets the section 135(1) criteria. Its Board decides to fund a rural school project through a registered trust that has been doing similar work for four years and holds the printed tax approvals. Clause (d) applies: the trust has an established track record of at least three years. Before the project starts, the trust must be registered in Form CSR-1, verified digitally by a practising professional, and receives a unique CSR Registration Number. As funds move, the Chief Financial Officer certifies that they were used as approved; the Board monitors the three-year project against its timelines and yearwise allocation, as rule 4(6) requires.
Need help with CSR registration?
A trust or section 8 company that is not registered in CSR-1 cannot be used as an implementing entity for a new project. Our 12A, 80G and CSR registration team can prepare the Board resolution, the CSR-1 and the supporting papers.
Key takeaways
- Rule 3 reaches holding and subsidiary companies and foreign companies with a branch or project office in India that meet the section 135(1) criteria.
- A company with money in the Unspent CSR Account must constitute a CSR Committee.
- CSR is implemented by the company itself or through the four printed routes.
- Implementing entities register in CSR-1 from 1 April 2021 and get a unique CSR Registration Number.
- The CFO certifies use of funds, and the Board monitors ongoing projects.
Read next
- Rules 1 and 2: definitions, what counts as CSR
- Rules 4A and 5: zero coupon zero principal instruments, committee, annual action plan
- CSR registration under Form CSR-1
- How to apply for CSR registration in CSR-1
Disclaimer: Based on the Companies Act, 2013 rules (and the Companies (Auditor's Report) Order, 2020) named above as consolidated in the MCA e-book (consulted on 3 October 2026), with the later notifications the article names. Later amendments, fees, forms and the Companies Act, 2013 provisions referred to should be checked. This article is general information, not legal advice; check the official text before acting.