If your finance team has spent the last few years budgeting 2% of average net profit toward CSR every single year because you’re just barely above the ₹5 crore threshold, you’re going to want to read this one carefully — because the ground under that obligation is shifting, though not quite as fully or as immediately as some of the headlines suggest.
The change, and the important caveat
The Corporate Laws (Amendment) Bill, 2026, introduced in the Lok Sabha on 23 March 2026, proposes to raise the net profit threshold that triggers mandatory CSR spending under Section 135 of the Companies Act, 2013, from ₹5 crore to ₹10 crore — or such other sum as may be prescribed. That’s the headline number everyone’s talking about, and if it comes into force as drafted, it would take an estimated 30,000 to 40,000 companies that are currently caught by the ₹5 crore trigger out of the mandatory CSR net entirely.
Here’s the caveat that matters most: this is a Bill, not an Act. As of mid-2026, it has been referred to a Joint Parliamentary Committee for detailed scrutiny, and the Committee has actively been inviting views and suggestions from industry associations, professional bodies, and other stakeholders. Individual provisions — including this exact threshold number — could still change before final enactment. Treat ₹10 crore as the proposed direction of travel, not a number you should already be building into next year’s board resolution.
It’s also worth being precise about what is and isn’t changing. Section 135 currently sets three independent triggers for CSR applicability — a company falls within its scope if it meets any one of: net worth of ₹500 crore or more, turnover of ₹1,000 crore or more, or net profit of ₹5 crore or more in the preceding financial year. The Bill only touches the net profit figure. The net worth and turnover triggers remain exactly where they are. So a company with net worth of ₹600 crore but relatively modest profit will still be squarely within CSR applicability regardless of what happens to the profit threshold — this change specifically helps mid-sized, profitable companies that were being pulled into the CSR regime purely by the profit test, not larger companies caught by the balance-sheet-size tests.
The Bill also states that companies meeting prescribed conditions may not be required to comply with CSR provisions at all — language that leaves room for further exemption categories to be notified once the Bill is enacted and rules follow.
Why the ₹5 crore number needed revisiting
The ₹5 crore net profit threshold has been sitting untouched since Section 135 was first introduced in 2013. Over more than a decade of inflation and rising compliance overhead, the practical burden on a company just above that line has become disproportionate to its size. A company earning ₹6 crore in net profit, for instance, ends up spending roughly ₹12 lakh on CSR activities alone — but that’s really just the visible cost. Underneath it sits the administrative machinery: forming a CSR Committee with at least three directors including an independent director, engaging CSR consultants, registering implementing agencies through Form CSR-1 on the MCA portal, filing Form CSR-2 annually, and disclosing CSR particulars in the Board’s Report. For a genuinely mid-sized company, that overhead is a meaningfully different proposition than it is for a company earning ₹50 crore or ₹500 crore. Raising the threshold to ₹10 crore is, in effect, an attempt to recalibrate the profit test for what “mid-sized but profitable” actually looks like in 2026 rather than 2013.
Don’t confuse this with the CSR Policy Amendment Rules, 2026
Separately — and this is a common source of confusion — MCA notified the Companies (CSR Policy) Amendment Rules, 2026 on 27 May 2026, introducing a new Rule 4A into the CSR Rules, 2014. This is a narrow, unrelated change: it permits companies to route a portion of their CSR spend through the Social Stock Exchange ecosystem by subscribing to zero coupon zero principal instruments issued by eligible not-for-profit organisations. It does not touch eligibility, computation, or reporting thresholds at all. If you’ve seen both “CSR threshold change” and “CSR SSE rules” mentioned in the same news cycle, they are genuinely two separate developments moving on two separate tracks — one legislative and pending, one already notified and operative.
What companies should do right now
If your net profit sits between ₹5 crore and ₹10 crore and CSR applies to you purely because of the profit trigger — not because of net worth or turnover — start scenario planning now, but don’t act as though the exemption is already law. Model both outcomes: continue treating CSR as mandatory for FY 2026-27 budgeting purposes, while separately preparing a contingency plan for what happens to ongoing CSR projects, especially multi-year ones, if the threshold change comes into force mid-cycle.
Check the unspent CSR transfer timeline for ongoing projects if you’re currently mid-way through a multi-year CSR commitment. There’s early indication that the Bill may also touch the time limit for transferring unspent CSR amounts on ongoing projects, so if you have money sitting in a designated unspent CSR account, keep an eye on how transitional provisions are eventually drafted rather than assuming your existing commitments simply evaporate if you cross out of applicability.
Don’t unwind your CSR Committee or governance structure yet. Even companies that expect to fall below the revised threshold should keep their CSR Committee and reporting discipline intact until the Bill is enacted and the exact commencement and transitional rules are notified. Dismantling structures prematurely, only to find the final threshold or applicability conditions differ from the current draft, creates unnecessary rework.
If you’re a larger company caught by net worth or turnover, this change simply doesn’t affect you — don’t spend cycles modelling scenarios that don’t apply to your CSR trigger.
Engage with the process if you have a genuine stake in the outcome. The Joint Parliamentary Committee is actively inviting submissions from industry bodies and stakeholders. If your industry association hasn’t already made a representation on the CSR threshold, this is the window to influence the final number before it’s locked into law.
The takeaway
This is one of those regulatory changes where the direction is fairly clear — relief for mid-sized, profitable companies that have been carrying CSR obligations disproportionate to their scale — but the specifics are still in motion. Track the Bill’s progress through the Joint Parliamentary Committee rather than treating any number currently in circulation as final, and keep your CSR governance running exactly as it is until you have a notified rule in hand.
This article summarises provisions of the Corporate Laws (Amendment) Bill, 2026, which remained before a Joint Parliamentary Committee at the time of writing and is subject to change before enactment. Companies should consult their company secretary or legal advisor before making any changes to CSR governance based on the proposed threshold.
