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Companies can show expenses incurred to vaccinate individuals in their supply chains and local communities as part of their corporate social responsibility (CSR) spending, a government official said, adding vaccinating own employees will not qualify as CSR.

Companies with a net worth of 500 crore or more, or revenue of 1,000 crore or more, or net profit of 5 crore or more, are required to spend 2% of their average net profit of the preceding three years on CSR activities.

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The decision was made following queries from the industry, the official cited above said on condition of anonymity, adding this would contribute to society and prevent business disruption due to covid-19 infections. “However, this does not cover the company’s own employees as spending on employees is not the philosophy of CSR," the official said. The move would enable companies with many small suppliers, especially in the informal sector, to extend vaccination to their workers.

The government has promised to vaccinate 300 million people, including health workers, police, municipal workers, the elderly, and those with co-morbidities. Eventually, private players will be allowed to sell vaccines in the open market, but the price of the vaccines are likely to be more expensive.

Last year, the government had tweaked CSR rules to give more flexibility to use this fund in a way that suits current realities. Accordingly, in August, life sciences companies with research and development activities were allowed to spend CSR funds to find therapies for covid, subject to riders. It removed the restriction on life sciences firms spending CSR funds in activities part of their normal course of business.

Also, donations to the Prime Minister’s emergency fund set up to fight the pandemic qualify as CSR spending. Indian businesses spend 15,000 crore a year on CSR as per pre-pandemic official estimates.

Since covid is notified as a pandemic, businesses could spend CSR funds to fight the disease. Promoting healthcare, including preventive care and disaster management, qualifies as CSR spends. Companies are free to make a broad interpretation of the areas specified for utilization of CSR funds.

CSR spending helps firms in winning goodwill among the local community, which is often affected by environmental impact and loss of land. When a large corporation conducts health camps or other services to the community, it also helps many of its own employees who belong to the locality, something that indirectly benefits the company. The government encourages CSR spending as it complements its own efforts to improve healthcare and alleviate poverty.

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