Can untilised CSR funds put in a escrow account can be released back to companies after completion of deliverables..What are the condition and time period for utilising the money which is in escrow account..
Unutilised CSR funds falling short of annual CSR obligation have to be deposited by the company in an Unutilised CSR account with Bank to be opened by the company every year within 30 days of close of financial year. For ongoing projects, the funds can be carried and utilised within next 3 financial years (since max duration of a CSR project is 4 FYs) failing which the unspent amount will need to be transferred to Schedule VII Fund (PM National Relief Fund, PM-CARES, Swachh Bharat Kosh, Clean Ganga Fund) within 30 days of close of terminal FY. For standalone projects (one time, non-ongoing), the unutilized fund has to be deposited in Schedule VII Fund within 6 months of close of FY or can be repurposed as ongoing project also.
These provisions introduced by MCA in 2021 aim to ensure both utilization of obligated CSR funds by companies without allowing CSR funds to get lapsed and completion of CSR projects and reporting of program and financial data by implementing agency (NGO mainly) in a timely manner.
CS Sharad Bhargava
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