CSR Compliance for Trusts in India

A company agrees to support your NGO's education programme. The first instalment arrives. A few months later, its CSR team asks for a progress update, details of the beneficiaries, the amount used so far and supporting documents.

Your team starts searching through spreadsheets, bank statements, receipt books, email attachments and WhatsApp conversations.

The project may be making a real difference in the community. But if the records are scattered, answering straightforward questions can take days.

This is a challenge many trusts and NGOs face as they begin working with corporate CSR partners. Companies need to monitor the projects they approve and satisfy themselves that funds are being used for the intended purpose. Implementing organisations therefore need a reliable way to maintain project, funding, beneficiary and supporting-document records.

This guide explains the CSR framework relevant to trusts in India and gives you a practical system for keeping project information organised.

Important: This article is general information, not legal, tax or accounting advice. CSR eligibility depends on the organisation's legal category and the applicable rules. Have your CA or legal adviser verify your organisation's eligibility and the latest MCA and Income-tax requirements before accepting a CSR assignment.

What does CSR mean for a trust or NGO?

Corporate Social Responsibility (CSR) under Section 135 of the Companies Act, 2013 requires qualifying companies to spend at least 2% of their average net profits made during the three immediately preceding financial years on CSR activities, subject to the Act and applicable rules.

A company is covered when, during the immediately preceding financial year, it meets any one of these thresholds:

Net worth of ₹500 crore or more
Turnover of ₹1,000 crore or more
Net profit of ₹5 crore or more

CSR activities must fall within the framework of Schedule VII of the Companies Act. A company may carry out eligible activities itself, through an eligible implementing agency, or in collaboration with other companies.

This creates an opportunity for eligible trusts, societies and Section 8 companies to implement CSR projects. However, being a registered trust or NGO does not automatically make an organisation eligible to receive CSR project funding as an implementing agency.

The company must use an implementing agency that meets the applicable conditions under Rule 4 of the Companies (CSR Policy) Rules, 2014.

Who can act as a CSR implementing agency?

Rule 4(1) of the Companies (CSR Policy) Rules, 2014 describes the categories of entities that may act as implementing agencies. The conditions depend on how the entity was established and its legal category.

For example, the rules cover:

A Section 8 company, registered public trust or registered society established by a company, or jointly by companies, subject to the applicable conditions.
A Section 8 company, registered trust or registered society established by the Central or State Government.
An entity established under an Act of Parliament or a State legislature.
Certain other Section 8 companies, registered public trusts and registered societies that meet the specified tax-registration and track-record conditions. For this category, the rules refer to registration under Sections 12A and 80G of the Income-tax Act, 1961 and an established track record of at least three years in undertaking similar activities.

The MCA FAQ also explains that the tax-registration conditions differ for entities established by the Central or State Government.

Is Form CSR-1 required?

Eligible implementing agencies covered by Rule 4(1) are required to register on the MCA21 portal by filing Form CSR-1. The registration results in a CSR registration number, which companies commonly request when evaluating an implementing partner.

CSR-1 is not the same as an organisation's trust registration, tax registration or donor-deduction approval. It is a separate registration requirement in the CSR framework.

A note about the Income-tax Act, 2025

The Income-tax Act, 2025 came into force on 1 April 2026. It reorganises the tax-registration framework for non-profit organisations, including the RNPO framework.

If your organisation is applying for CSR-1 or entering a new CSR agreement in 2026, ask your CA or legal adviser to confirm how the current tax registration and transition provisions apply to your specific entity.

For a broader explanation of the tax-law transition, read our guide: Comparing Income Tax Rules for NGOs & Trusts 2026: Old vs New Rules.

What should a trust prepare before accepting a CSR project?

Before starting a project, clarify the requirements with the corporate partner. A practical preparation checklist includes:

Area	Records to organise
Organisation identity	Trust or society registration documents, PAN and governing documents
Tax and CSR eligibility	Applicable tax registrations, CSR-1 acknowledgement and CSR registration number, where required
Project approval	Sanction letter, agreement or MoU, approved proposal, objectives and project period
Project plan	Locations, activities, milestones, expected outputs and approved budget
Funding	Amount sanctioned, instalments, dates received and conditions attached to the funding
Beneficiaries	Eligibility criteria, beneficiary records, location and assistance provided
Project evidence	Bills, vouchers, activity records, photographs and other supporting documents
Reporting	Corporate reporting format, review dates, utilisation information and final-report requirements

The exact list will vary. Ask the corporate for its documentation checklist and reporting template before the project begins.

Step 1: Create a separate record for every corporate partner

Do not treat a CSR partner as just another donor name in a receipt register. Maintain a partner profile that brings together the organisation's details and the projects it supports.

Useful information includes:

Company's legal name and CIN
PAN and official contact details, where relevant
CSR contact person and communication details
CSR-1 or eligibility documents exchanged
Signed MoU, sanction letter and approved proposal
Projects supported by the company
Approved funding and instalment schedule
Reporting format, review dates and submission deadlines

Keep the signed agreement and later amendments with the partner's records. This helps your team confirm what was approved rather than relying on old email conversations.

Step 2: Maintain a clear record for every CSR project

Each project should have its own identity and working record.

For every project, document:

Project name and reference
Corporate partner
Objectives and the relevant Schedule VII area
Project location and target community
Start date, planned completion date and milestones
Approved activities and budget
Beneficiary criteria and expected reach
Project coordinator and responsible team members
Agreement, approvals and supporting files

A project record makes it easier to distinguish one corporate-funded programme from another, especially when an organisation is running several activities at the same time.

Remember that the project must be approved and structured in accordance with the corporate's CSR policy and applicable CSR rules. Software records do not themselves establish that an activity is eligible under Schedule VII.

Step 3: Track committed, received and utilised funding

One of the most important controls is knowing the difference between the amount approved, the amount actually received and the amount used.

For example:

Funding position	Amount
Approved project funding	₹20,00,000
Amount received so far	₹12,00,000
Amount utilised and supported by records	₹9,00,000
Amount received but not yet utilised	₹3,00,000

These figures answer different questions. A transfer from the company to an implementing agency should not automatically be treated as proof that the corresponding amount has already been utilised for the project.

The MCA's CSR FAQ explains that mere disbursal to an implementing agency does not by itself amount to CSR spending by the company unless the amount is utilised for the approved purpose. The company's Board must satisfy itself about utilisation, and the CFO or person responsible for financial management must certify it as prescribed.

For your own records:

Record each instalment with its date, amount and reference.
Link the funding entry to the relevant corporate and project.
Record project-related expenses with bills, invoices or vouchers.
Reconcile the project's records with the relevant bank and accounting entries.
Record any changes to the approved plan or budget with the appropriate written approval.
Keep unutilised balances visible rather than treating all received funds as spent.

Do not assume that every corporate agreement uses the same utilisation format or timetable. Follow the approved project terms and the company's reporting requirements.

For more on connecting receipts and accounting records, read How to Maintain Cash Book, Bank Book & Donation Ledger for a Trust, NGO or Religious Trust.

Step 4: Record beneficiaries throughout the project

Beneficiary information should be collected as activities happen, not reconstructed at the end of the year.

Depending on the programme, a beneficiary record may include:

Beneficiary name or an appropriate unique reference
Project and activity
Village, ward, district or other relevant location
Relevant demographic information required for the programme
Type of support or service provided
Date or period when support was provided
Attendance, acknowledgement or other evidence, where appropriate

Use consistent categories

Choose consistent terms and categories. If one team member records "students", another records "school children" and a third records "children", your reports may count the same group inconsistently.

Avoid duplicate counting

The same person may participate in more than one activity or receive support under more than one project. Decide whether a report is counting unique individuals, visits, services or items distributed. State the basis clearly.

Protect personal information

Collect only the information needed for the project and the agreed reporting purpose. Restrict access to beneficiary records and avoid sharing sensitive identifiers unnecessarily.

Do not collect Aadhaar details simply because a spreadsheet has a column for them. If an identifier is genuinely required, confirm the lawful basis, necessity, consent or other applicable requirements, security measures and sharing arrangements with your adviser.

Step 5: Keep project documents in one organised place

A project folder or document record should make it easy to find:

MoU, sanction letter and approved proposal
Project budget and approved revisions
Funding confirmations and relevant bank records
Bills, invoices and vouchers
Activity reports and attendance records
Beneficiary lists or appropriately protected beneficiary summaries
Photographs and other implementation evidence
Progress reports and utilisation statements
Final reports and certificates provided to the corporate

Use a consistent naming convention and restrict access to sensitive files. Keep the records for the period required by law, the agreement and your organisation's document-retention policy.

Step 6: Agree on reporting before the project starts

Do not wait until the corporate asks for a report to decide what information to collect.

Agree on:

Reporting frequency: monthly, quarterly, milestone-based or final
Required report format and submission channel
Financial information and supporting documents required
Beneficiary definitions and counting method
Evidence expected for activities and outcomes
Who prepares, reviews and approves each submission

A useful project update will normally explain:

What activities were planned?
What has been completed during the reporting period?
How much funding was approved and received?
What expenditure has been incurred and what supports it?
How many beneficiaries were reached, using what counting method?
What challenges, delays or changes need to be disclosed?
Which supporting documents are attached?

The corporate's agreement and applicable rules determine the formal reporting obligations. This checklist is a practical starting point, not a substitute for the prescribed format.

Common CSR record-keeping mistakes

Mixing records from different projects. When funding and expenses are not tagged to a project, it becomes harder to explain utilisation.

Treating funds received as funds utilised. Maintain separate figures for approved, received and utilised amounts.

Recording beneficiaries only at the end. This creates missing information and duplicate-counting problems.

Ignoring the approved project plan. Keep written records of approved changes to activities, timelines and budgets.

Keeping evidence on personal phones. Important records can become inaccessible when staff or volunteers change.

Sharing too much personal data. Provide the corporate with the information it needs, while protecting beneficiary privacy.

Waiting until the deadline to prepare reports. Agree on the format and reporting calendar before implementation begins.

How TrustSetu helps organise CSR projects

A CSR project involves more than a funding figure. Your team needs to keep corporate details, project information, beneficiary records, documents and financial entries connected.

TrustSetu's CSR module is an optional add-on designed to help trusts and NGOs organise these records in one place.

Here is how the workflow can look inside TrustSetu.

1. Maintain corporate partner records

Create a record for each corporate partner and keep its relevant details and supporting documents together. This gives your team a consistent place to refer to when reviewing the projects supported by that company.

2. Create and manage CSR projects

Create individual project records and maintain project information, categories, documents and the project dashboard. This helps your team work with a clear record for each initiative instead of relying on separate spreadsheets.

CSR Project List

Project Dashboard

CSR Project > Area of Operations - Add corporates - Record Agreed Budget

3. Link project funding with donation receipts

TrustSetu supports linking project funding with donation receipts. This helps connect the funding record to the receipt and the organisation's accounting workflow.

Donation receipts are connected with the income ledger and the relevant cash or bank records according to the payment mode. This reduces the need to maintain the same receipt transaction separately in multiple places.

CSR Project > Record Funding

CSR Project > Issue Receipt

4. Maintain beneficiary records project-wise

Add beneficiary records to the relevant CSR project and use the available project dashboard filters to review them. This helps your team keep beneficiary information associated with the programme it relates to.

5. Attach supporting documents

Keep relevant files with corporate and project records, rather than leaving them scattered across personal devices and unrelated folders.

One connected workflow

With TrustSetu, the workflow can bring together:

Corporate partner records
CSR project records and categories
Project funding linked to donation receipts
Beneficiary records associated with projects
Documents attached to corporate and project records
Accounting entries connected to donation receipts

TrustSetu helps organise operational records. It does not determine whether an organisation is legally eligible to act as an implementing agency, certify that a CSR activity qualifies under Schedule VII, independently verify project utilisation or replace a corporate's prescribed reporting process. Your CA and the corporate partner remain responsible for the relevant professional review, approvals and certifications.

Explore TrustSetu or request a demo to see how the CSR workflow can fit into your organisation's record-keeping process.

Frequently asked questions

Can a trust receive CSR funding in India?

A trust may act as a CSR implementing agency if it falls within an eligible category under Rule 4(1) of the Companies (CSR Policy) Rules, 2014 and meets the conditions applicable to that category. Registration as a trust alone is not sufficient. Check the relevant tax-registration, track-record and CSR-1 requirements with your adviser.

What is Form CSR-1?

Form CSR-1 is filed on the MCA21 portal by implementing agencies covered by Rule 4(1). It registers the eligible implementing agency in the CSR framework and results in a CSR registration number.

Is CSR-1 the same as 12A or 80G registration?

No. They serve different purposes. CSR-1 is an implementing-agency registration under the CSR framework. Tax registration and donor-deduction approval are separate matters. Because the Income-tax Act, 2025 came into force on 1 April 2026 while the published CSR Rule wording refers to the 1961 Act, confirm the applicable transition and current requirements rather than assuming the registrations are interchangeable.

Does every trust need a three-year track record?

No. The three-year similar-activity track-record condition applies to the relevant category of implementing agencies described in Rule 4(1). Other categories have different conditions. Check which category applies to your organisation.

Should CSR funds be tracked separately for each project?

Maintain project-wise records of approved funding, instalments received, utilisation, expenses and supporting documents. This makes it easier to demonstrate how each project was implemented and to respond to the corporate's reporting requirements.

What beneficiary details should an NGO collect?

Collect only details that are relevant and necessary for the project and its reporting requirements. This may include a beneficiary reference, location, relevant demographic categories, the support provided and the date. Protect personal information and avoid collecting sensitive identifiers without a clear need and appropriate safeguards.

Does transferring CSR funds to an NGO automatically count as CSR spending by the company?

No. The MCA FAQ explains that mere disbursal to an implementing agency does not amount to spending unless the funds are utilised for the approved purpose. The company's Board must satisfy itself about utilisation in the manner prescribed by the CSR Rules.

Can software prepare all CSR compliance reports automatically?

Software can help organise project, funding, beneficiary and document records. Whether those records satisfy a particular corporate's reporting format or legal requirement must still be checked. TrustSetu helps maintain the underlying records; it does not replace professional review or corporate approval.

Make CSR project records easier to manage

CSR partnerships need more than a good proposal. They need consistent project records, traceable funding, reliable beneficiary information and supporting documents that are available when required.

Start organising these records from the first day of a project. It will make progress reviews easier for your team and help you respond more confidently when a corporate partner asks for an update.

Explore TrustSetu or contact our team for a demo to see the CSR module in action.

References and further reading

Official references

Related TrustSetu guides

CSR Compliance for Trusts in India: How to Track Corporate Funding and Beneficiaries