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IndiaTax & ComplianceUpdated: Sep 13, 2026
Direct Answer
Mandatory CSR expenditure under Section 135 of the Companies Act is explicitly disallowed as a business deduction under Section 37(1) of the Income Tax Act. However, donations to eligible funds (like PM CARES) can be claimed under Section 80G.
The Double Whammy
If your company meets the CSR criteria (Net Worth > 500 Cr, Turnover > 1000 Cr, or Net Profit > 5 Cr), you must spend 2% of average net profits. While it is an expense in your P&L, you must add it back to taxable income when filing your corporate tax return.
Section 80G Workaround
If you fulfill your CSR obligation by donating to the Prime Minister's National Relief Fund (PMNRF) or specified approved NGOs, you can claim a deduction under Section 80G. You must obtain Form 10BE from the NGO to prove the deduction.