Most corporate tree plantation projects in India are not killed by
drought. They are killed by an auditor asking one question: where is the
proof?
A company writes a cheque. An NGO plants saplings. Someone from the CSR
team flies down, holds a spade for a photograph, and the LinkedIn post
goes up by evening. Eighteen months later the statutory auditor asks for
the geo-coordinates, the species list, the survival data and the
implementing agency’s CSR-1 registration number, and nobody in the room
has any of it.
That is not a plantation problem. That is a documentation problem — and
in 2026, with the Ministry of Corporate Affairs tightening its
interpretation of what a defensible CSR project looks like, it has
become an expensive one.
This piece breaks down exactly where tree plantation sits in India’s CSR
law, what makes a project eligible, and what your file needs to contain
before an auditor opens it.
FIRST: DOES TREE PLANTATION EVEN COUNT AS CSR?
Yes — and the basis is narrower than most people assume.
CSR-eligible activity in India is not defined by good intentions. It is
defined by Schedule VII of the Companies Act, 2013, a closed list of
categories read together with MCA circulars.
Tree plantation falls under item (iv) — ensuring environmental
sustainability, ecological balance, protection of flora and fauna,
animal welfare, agroforestry, conservation of natural resources and
maintaining quality of soil, air and water.
Three things follow from that wording, and each one has tripped up real
companies:
- AGROFORESTRY IS EXPLICITLY NAMED
This matters. A plantation programme that puts fruit-bearing or
medicinal species on farmer land, with an income stream attached, sits
squarely inside Schedule VII. It is not a stretched interpretation.
- “ENVIRONMENTAL SUSTAINABILITY” IS NOT A BLANK CHEQUE
MCA’s consistent position is that there must be a direct, defensible
link between the activity and the Schedule VII category.
Landscaping the corporate campus does not survive this test. Planting
inside a factory boundary primarily for aesthetics does not either — and
if the benefit accrues mainly to employees, it is disqualified outright,
because CSR cannot be spent on activities carried out exclusively for
employees and their families.
- NORMAL COURSE OF BUSINESS IS OUT
If you are a nursery, a timber company or a landscaping firm, plantation
is your business, not your CSR.
WHO IS ACTUALLY LIABLE?
CSR applies to any company — private, public, listed, unlisted, Section
8, or the Indian arm of a foreign parent — that crosses any one of three
thresholds in the immediately preceding financial year:
- Net worth of ₹500 crore or more • Turnover of ₹1,000 crore or more •
Net profit of ₹5 crore or more
Cross one, and the obligation triggers: spend at least 2% of the average
net profits of the three immediately preceding financial years,
calculated under Section 198 of the Act — not under the Income Tax Act.
That distinction alone accounts for a fair number of computation errors.
Worth watching: the Companies (Amendment) Bill, 2025, still pending,
proposes pulling those thresholds down to ₹100 crore net worth, ₹500
crore turnover and ₹3 crore net profit.
If it passes in its current form, a large band of mid-market Indian
companies enters the CSR net for the first time — most of them without
an in-house CSR function.
THE FOUR DOCUMENTS THAT DECIDE WHETHER YOUR SPEND SURVIVES AUDIT
Here is where plantation projects actually fail. Not in the field. In
the file.
- CSR-1 REGISTRATION OF THE IMPLEMENTING AGENCY
If you are routing CSR spend through an NGO, trust, society or Section 8
company, that entity must be registered with the MCA via Form CSR-1 and
hold a valid CSR Registration Number. This has been mandatory since 1
April 2021.
No CSR-1, no valid spend. It is that binary. Ask for the CSRN before the
first tranche leaves your account, and put it in the agreement.
- A BOARD-APPROVED ANNUAL ACTION PLAN
The CSR Committee must formulate, and the Board must approve, an Annual
Action Plan specifying the list of projects, the manner of execution,
modalities of fund utilisation, and — critically — the monitoring and
reporting mechanism.
For a plantation project, “monitoring mechanism” cannot read “periodic
review by the CSR team.” That is what a weak file looks like. A strong
one names the survival audit schedule, the verification method, and who
signs off.
- FORM CSR-2 FILING
Form CSR-2 is the annual CSR report filed with the MCA, submitted
through the V3 portal, and it requires project-level disclosure — not a
lump-sum environment number.
Project name, location, duration, amount spent, implementing agency and
CSRN, mode of implementation.
If your plantation project cannot be described at that granularity, it
cannot be filed cleanly.
- INDEPENDENT IMPACT ASSESSMENT — THE ₹10 CRORE TRIGGER
Companies with an average CSR obligation of ₹10 crore or more over the
three immediately preceding financial years must have qualifying
projects assessed by an independent agency. The assessment report goes
to the Board and is annexed to the annual CSR report.
An impact assessor evaluating a tree plantation project will ask for
baseline land condition, species-wise planting records, survival
percentage against a defined measurement window, and evidence of
community involvement.
If the only artefact is an invoice for “50,000 saplings,” the assessment
will say so in writing, and that document becomes part of your permanent
record.
TWO STRUCTURAL CHOICES THAT QUIETLY DECIDE EVERYTHING
STRUCTURE IT AS AN “ONGOING PROJECT”
An ongoing project is a multi-year project with a duration not exceeding
three financial years, excluding the year of commencement, and it must
be identified as such by the Board.
This is the single most useful structuring decision available to a
plantation programme, for a simple reason: trees do not become an
outcome in twelve months.
A one-year plantation project forces you to report success at the exact
moment when survival data is least meaningful. A three-year ongoing
project lets you fund planting in Year 1 and maintenance, replacement
and survival auditing in Years 2 and 3 — which is what actually produces
a forest.
It also changes fund treatment.
Unspent amounts on an ongoing project go to a dedicated Unspent CSR
Account under Section 135(6), to be transferred within 30 days of the
end of the financial year, and spent within three financial years.
Unspent amounts on a non-ongoing project go straight to a Schedule VII
fund within six months.
Misclassify, and you have a compliance breach that has nothing to do
with the trees.
WATCH THE 5% ADMINISTRATIVE OVERHEAD CAP
Administrative overheads are capped at 5% of total CSR expenditure for
the financial year.
The recurring dispute in plantation programmes: is monitoring cost an
administrative overhead, or is it project cost?
The defensible position is that monitoring which is intrinsic to project
delivery is project expenditure — a survival audit is not overhead, it
is the mechanism by which the outcome is produced and evidenced.
General CSR team salaries and office costs are overhead.
Document the distinction in your Annual Action Plan rather than arguing
it retrospectively.
WHAT CHANGED IN 2026?
The Companies (CSR Policy) Amendment Rules, 2026, notified on 27 May
2026, introduced a new Rule 4A.
For the first time, companies may discharge part of their CSR obligation
by subscribing to zero coupon zero principal (ZCZP) instruments issued
by NPOs registered on the Social Stock Exchange — subject to a 10% cap,
and paired with an exemption from the impact assessment requirement for
projects funded that way.
For environmental programmes this is a genuine option, but read the
trade carefully.
You are exchanging direct project control and a first-party audit trail
for a lighter compliance path.
If your board wants a named, geo-tagged, verifiable plantation asset
attached to the company’s name, the ZCZP route gives you a cleaner
filing and a thinner story.
If it wants a compliance line item closed with minimum friction, it
works well.
The 2% obligation itself is untouched. Nothing in Rule 4A reduces it.
THE GREEN CREDIT OVERLAP — READ THIS BEFORE YOU PROMISE ANYTHING
The Green Credit Programme, notified under the Green Credit Rules, 2023,
allows entities to undertake tree plantation on degraded forest land
registered by state forest departments and earn green credits, with
ICFRE as the nodal agency.
Green credits can be reflected in ESG disclosures under SEBI’s BRSR
framework and have been positioned as a CSR metric.
But the rules were revised on 29 August 2025, and the revision changed
the economics substantially:
- Credits are issued only after a minimum of five years of restoration
activity. • Credits are calculated on vegetation status — change in
canopy density, after achieving a minimum 40% canopy density — and the
number of surviving trees. • Green credits from tree plantation are now
non-tradable and non-transferable, except between a holding company and
its subsidiaries.
That last point is the walk-back that matters.
The original vision of an open, tradable green-credit market is gone for
plantation. Anyone still pitching tradable green credits from a CSR
plantation drive is working off outdated rules.
The revision is also, quietly, a validation of the survival-first
approach.
The regulator has decided that a credit should reward a canopy that
exists in year five, not a sapling that existed on planting day.
THE AUDIT-READY FILE: A WORKING CHECKLIST
For every plantation project, hold the following:
- Implementing agency’s CSR Registration Number and Form CSR-1
acknowledgement • Board resolution approving the project within the
Annual Action Plan, with ongoing-project classification stated • Land
documentation — ownership, lease, or written permission from the
landholding authority, gram panchayat or forest department • Baseline
record — pre-plantation land condition, photographs with coordinates,
date-stamped • Species schedule — botanical names, native status, count
per species, source nursery • Geo-coordinates at plot level, at minimum;
sapling level where the programme supports it • Survival audit reports
at defined intervals with the sampling methodology stated •
Community/beneficiary records where community participation is claimed •
Fund flow trail — tranche releases mapped to delivery milestones, not
calendar dates • Impact assessment report where the ₹10 crore trigger
applies
If a project cannot produce the first six, the honest position is that
it is a donation with a photograph attached — which may be a fine thing
to do, but should not be filed as a defensible CSR project.
THE SHIFT THAT IS ACTUALLY HAPPENING
CSR in India started as a spending obligation. It is becoming an
evidence obligation.
The direction of travel across every recent change points the same way:
project-level disclosure in CSR-2, independent impact assessment above
₹10 crore, five-year survival windows and 40% canopy density under the
revised Green Credit rules, and increasing regulatory attention to
greenwashing in environmental claims.
The regulator is no longer asking how much you spent. It is asking what
still exists.
For tree plantation specifically, that is good news — because it finally
rewards the organisations that were doing the unglamorous part all
along: the maintenance visit in the third summer, the replacement of the
12% that did not make it, the survival audit nobody asked to see.
Planning your CSR environment spend for FY 2026-27?
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FREQUENTLY ASKED QUESTIONS
Q: Is tree plantation covered under Schedule VII of the Companies Act?
A: Yes. Tree plantation falls under item (iv) of Schedule VII, which
covers ensuring environmental sustainability, ecological balance,
agroforestry and conservation of natural resources. The activity must
have a direct and defensible link to that category and must not benefit
the company’s employees exclusively.
Q: Can a company plant trees on its own factory premises and claim it as
CSR?
A: Generally no. Plantation confined to company premises, where the
primary benefit accrues to the company or its employees, does not meet
the public-purpose test. Plantation on community land, degraded
government land or farmer land, with beneficiaries outside the company,
is the defensible structure.
Q: Does the implementing NGO need to be registered for a CSR plantation
project?
A: Yes. Any implementing agency receiving CSR funds must be registered
with the MCA through Form CSR-1 and hold a valid CSR Registration
Number. Verify this before releasing funds.
Q: When is an impact assessment mandatory for a tree plantation project?
A: When the company’s average CSR obligation over the three immediately
preceding financial years is ₹10 crore or more, qualifying projects must
be assessed by an independent agency.
Q: Can CSR tree plantation earn carbon credits or green credits?
A: Green credits under the revised 2025 rules require a minimum of five
years of restoration on registered degraded forest land and a minimum
40% canopy density, and are non-tradable except between a holding
company and its subsidiaries.
Carbon credits under India’s CCTS offset mechanism follow a separate and
stricter framework, and generic corporate plantation drives do not
currently qualify.
Q: What happens to unspent CSR funds allocated to a plantation project?
A: For an ongoing project, unspent amounts transfer to an Unspent CSR
Account within 30 days of the financial year end and must be utilised
within three financial years.
For a project not classified as ongoing, unspent amounts transfer to a
Schedule VII fund within six months.