After the Ministry of Corporate Affairs announced that donations made by the companies to the PM CARES Fund would be considered as expenditure on Corporate Social Responsibility, many companies came through with their donations. However, there are a lot other ways that a company can use their CSR Funds to help the country fight COVID-19. Activities related to COVID-19 like promotion of healthcare, preventive healthcare, sanitation, disaster management would qualify for treatment as CSR, as per circular by Ministry.
The Ministry has been receiving several references/representations from various stakeholders seeking clarifications on eligibility of CSR expenditure related to COVID-19 activities.
Thus for better understanding and clarification, Ministry vide General Circular No. 15 /2020 dated 10th April, 2020 has introduced COVID-19 related Frequently Asked Questions (FAQs) on Corporate Social Responsibility (CSR)for different stakeholders:
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S. No. |
Frequently Asked Questions (FAQs) |
Reply |
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1 |
Whether contribution made to 'PM CARES Fund' shall qualify as CSR expenditure? |
Contribution made to 'PM CARES Fund' shall qualify as CSR expenditure under item no (viii) of Schedule VII of the Companies Act, 2013 and it has been further clarified vide Office memorandum F. No. CSR-05/1/2020-CSR-MCA dated 28th March, 2020. |
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2. |
Whether contribution made to 'Chief Minister's Relief Funds' or 'State Relief Fund for COVID-19' shall qualify as CSR expenditure? |
'Chief Minister's Relief Fund' or 'State Relief Fund for COVID-19' is not included in Schedule VII of the Companies Act, 2013 and therefore any contribution to such funds shall not qualify as admissible CSR expenditure. |
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3. |
Whether contribution made to State Disaster Management Authority shall qualify as CSR expenditure? |
Contribution made to State Disaster Management Authority to combat COVID-19 shall qualify as CSR expenditure under item no (xii) of Schedule VII of the 2013 and clarified vide general circular No. 10/2020 dated 23rd March, 2020. |
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4. |
Whether spending of CSR funds for COVID-19 related activities shall qualify as CSR expenditure? |
Ministry vide general circular No. 10/2020 dated 23rd March, 2020 has clarified that spending CSR funds for COVID-19 related activities shall qualify as CSR expenditure. It is further clarified that funds may be spent for various activities related to COVID-19 under items nos. (i) and (xii) of Schedule VII relating to promotion of health care including preventive health care and sanitation, and disaster management. Further, as per general circular No. 21/2014 dated 18.06.2014, items in Schedule VII are broad based and may be interpreted liberally for this purpose. |
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5. |
Whether payment of salary/wages to employees and workers, including contract labour, during the lockdown period can be adjusted against the CSR expenditure of the companies? |
Payment of salary/ wages in normal circumstances is a contractual and statutory obligation of the company. Similarly, payment of salary/ wages to employees and workers even during the lockdown period is a moral obligation of the employers, as they have no alternative source of employment or livelihood during this period. Thus, payment of salary/ wages to employees and workers during the lockdown period (including imposition of other social distancing requirements) shall not qualify as admissible CSR expenditure. |
DISCLAIMER: THE ARTICLE IS BASED ON THE RELEVANT PROVISIONS AND AS PER THE INFORMATION EXISTING AT THE TIME OF THE PREPARATION. IN NO EVENT I SHALL BE LIABLE FOR ANY DIRECT AND INDIRECT RESULT FROM THIS ARTICLE. THIS IS ONLY A KNOWLEDGE SHARING INITIATIVE.
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