CSR in India: A Primer for Disability Inclusion Budgets

CSR in India is the corporate social responsibility spending that qualifying companies must plan, approve and report under Section 135 of the Companies Act, 2013. Qualifying companies must spend at least 2% of their average net profit on CSR activities, and those activities must fall within the list in Schedule VII of the Act. Disability inclusion can fit inside that framework, most directly under the item that covers education and vocational skills for the differently abled.

Key takeaways

• Section 135 of the Companies Act, 2013 sets the 2% spending rule for qualifying companies.
• Schedule VII lists eligible CSR activities. Disability programmes most often map to item (ii), which covers education and vocational skills for the differently abled.
• The board, on the recommendation of a CSR committee, approves the policy and oversees spending.
• Spending must be documented, and the annual CSR report forms part of the board's report.
• Disability-related spending still needs a clear link to a Schedule VII activity and records of what was delivered.

How CSR works under the Companies Act, 2013

Section 135 applies to companies that meet its thresholds in a given year. Those companies must spend at least 2% of the average net profit of the three preceding financial years on CSR activities. The calculation follows the Act and its rules, so the finance team and the company secretary should confirm it every year rather than rely on last year's figure. If a company does not spend the full amount, the board's report must explain the reasons.

The law sets the amount and the process. It does not set the cause. A company chooses its programmes, but the programmes must match an eligible activity, be approved under the company's CSR policy and be recorded in a way that can be checked later.

Schedule VII and eligible activities

Schedule VII lists the activities that can count as CSR. A company cannot choose any cause it likes and label the spend as CSR. Item (ii) covers promoting education, including special education and vocational skills, especially for the differently abled. For a disability programme, that item is usually the natural home. Other items may also apply depending on the design of the project, so it is worth checking the wording with counsel before a project is classified.

A useful test is to write one sentence that connects the programme to the schedule. For example: this project provides vocational skills training to people with visual impairment. If that sentence cannot be written clearly, the project needs more design work before it is approved.

Who does what in the programme

CSR works well when each role is clear. The table below shows the usual split of responsibilities in a company with a board-level CSR committee.

Implementing agencies and the board committee

A company can run a programme in-house or through an implementing agency, such as a registered trust, a society or a Section 8 company. In either case the company keeps responsibility for the spend. Before signing with an agency, check its registration, its track record in the field, its financial controls and its reporting habits. The CSR due diligence checklist for disability inclusion sets out the questions to ask.

The board-level CSR committee is where projects are shaped and tested. The committee should see a short project note for each disability programme: the Schedule VII item it maps to, the beneficiaries, the budget, the milestones and the outcome measures. Approval that is recorded clearly is much easier to defend later than approval that exists only in an email.

Where disability inclusion fits

India's disability law is the Rights of Persons with Disabilities Act, 2016, often called the RPWD Act. It sets the framework for the rights of persons with disabilities, and it gives CSR managers a useful reference point when they design programmes for blind and visually impaired people. The World Health Organization's 2019 World report on vision estimated that at least 2.2 billion people worldwide have a near or distance vision impairment, which is why vision-related programmes deserve careful design in India as well.

A disability programme can fit CSR through education, through vocational skills, or through both. Assistive technology training for students and job-skills training for adults are two common designs. A guide to how the RPWD Act connects to assistive technology planning is available in the RPWD Act 2016 guide for CSR managers.

The 2% budget and disability inclusion

A disability inclusion budget should be built from outcomes, not from the amount left over at year end. Start with the number of people the programme plans to equip, train or support, then cost each step: devices, training, onboarding, follow-up and reporting. This approach makes it easier to see what each rupee buys. The guide to per-rupee impact in disability inclusion budgets shows how to set up that calculation.

Annual report disclosure

The annual CSR report is prepared in the format the rules prescribe and is included in the board's report. It normally covers the CSR policy, the composition of the committee, the amount required to be spent, the amount actually spent, and the reasons for any shortfall. For disability programmes, the report should also say which Schedule VII item each project maps to, so that a reader can follow the logic from the budget to the outcome.

If you are building a disability inclusion budget for the coming year, start with the CSR policy and the committee calendar. Then pick one Schedule VII project you can document from end to end. Reach out to the SMARTON team to talk through a programme that fits your committee's timeline.