Schedule VII of the Companies Act, 2013 lists the activities a company may fund as corporate social responsibility. Item (ii) covers promoting education, including special education and employment-enhancing vocational skills, especially among children, women, the elderly and the differently abled, along with livelihood enhancement projects. Item (vii) covers training to promote rural sports, nationally recognised sports, Paralympic sports and Olympic sports. Between them they permit most of what a school does, but the exclusions written into the CSR Rules and MCA circulars decide what a compliant school project actually looks like.
What does item (ii), promoting education, permit?
The MCA has consistently asked that Schedule VII be read liberally, capturing the essence of each item rather than its exact wording. Under item (ii), education CSR has in practice funded school buildings and classrooms, laboratories and libraries, digital learning infrastructure, teacher training, scholarships and fee support for disadvantaged students, mid-day meal support, special-education facilities and vocational training. The common thread is that the benefit flows to learners in the community, not to the company or its staff.
For a K-12 school the item is wide enough to cover the whole public-good layer: seats for children from economically weaker sections, remedial and bridge programmes, learning-support staff, and the physical infrastructure that serves those learners. What it does not do is turn the school's commercial operations into a charitable activity, which is where the exclusions start to matter.
What does item (vii), sports, permit?
Item (vii) is narrower than it first appears. Its operative word is training: the item funds coaching, academies, athlete development and the infrastructure needed to deliver them, in rural sports, nationally recognised sports, Paralympic sports and Olympic sports. The 2021 amendment to the CSR Rules added a specific carve-out allowing spend on training of Indian sports personnel representing a state or union territory at national level or India at international level, even where that training takes place outside India.
A school sports complex funded under item (vii) therefore needs a training programme attached to it: coaching hours, athlete pathways, community access. A field with no programme is harder to defend than a field with one.
What can CSR under these items not fund?
| Exclusion | Source | What it means for a school project |
|---|---|---|
| Activities in the normal course of business | Rule 2(1)(d) | An education company cannot count its own product or service delivery as CSR |
| Activities benefiting only employees and their families | Rule 2(1)(d) | A company school for staff children is not CSR; community access is required |
| Sponsorships for marketing benefit | Rule 2(1)(d) | Naming rights and branded events fall outside CSR |
| Activities outside India | Rule 2(1)(d) | Excluded, save the sports-training carve-out above |
| Contributions to political parties | Rule 2(1)(d) | Not relevant to schools but frequently cited |
| Statutory obligations of the company | Rule 2(1)(d) | Spend to meet the company's own legal duties is not CSR |
| One-off events | MCA circulars | Marathons, awards, charitable contributions and similar events are not CSR unless part of a programme |
| Capital assets held by the company or a for-profit | Rule 7(4) | A CSR-funded building must be held by a registered not-for-profit, beneficiaries or public authority |
Two of these decide the architecture of a school deal. The normal-course-of-business exclusion means the operating school, which charges fees and delivers education as a service, cannot itself be the CSR project. And Rule 7(4) means the campus, if CSR-funded, must be owned by the Section 8 company, trust or society, not by a developer or the donor.
Ask who benefits and who owns. If the beneficiaries are learners from the community and the asset is held by a registered not-for-profit, the project is inside items (ii) and (vii). If the beneficiaries are the company's customers or staff, or the asset ends up on a commercial balance sheet, it is outside them regardless of how the proposal is worded.
How is a compliant school project drawn?
The structure that satisfies both items and their exclusions is a three-layer one. The campus is held under a long lease by a property company financed with real-asset capital. The school is run by a not-for-profit society, trust or Section 8 company, as state education law and board affiliation rules require. And a separate Section 8 vehicle, holding CSR-1, 12A and 80G registration, receives CSR funds for the public-good layer: scholarship seats, teacher training, learning-support programmes and sports training infrastructure. Investor returns never touch that layer; they arise only from arm's-length rent and service fees at the other two.
SriYantra's Section 8 vehicle is currently being established. CSR participation in SriYantra-structured projects opens on its CSR-1 registration, and the project designs are being drawn to items (ii) and (vii) as described above so that a CSR committee can map them line by line.
Frequently asked questions
Can CSR pay a school's teacher salaries?
It can fund teacher training and, as part of a programme, the cost of learning-support staff serving disadvantaged learners through a registered not-for-profit. Paying the routine payroll of a fee-charging school would fall within the normal course of the school's business and is not CSR.
Does a school sports ground qualify under item (vii)?
The item funds training to promote sports. A ground qualifies when it is part of a training programme, with coaching and community access, and is held by a registered not-for-profit or public authority.
Can a company's CSR fund a school for its employees' children?
No. Activities that benefit only the company's employees and their families are excluded from CSR under Rule 2(1)(d). Community access is required.
Where do the MCA's clarifications on Schedule VII come from?
From general circulars and FAQs issued by the Ministry of Corporate Affairs, most notably the 2014 circular asking that Schedule VII be interpreted liberally, and the 2021 FAQs issued after the CSR Rules were amended.
