Centre says UPA era rule prohibits chief ministers’ funds getting CSR donations

A rule introduced in February 2014 with effect from April that year disallows state chief ministers’ relief fund getting donations from companies’ corporate social responsibility (CSR) funds, said a senior government official.

A clarification by the ministry of corporate affairs on Saturday about which all funds are eligible for receiving CSR donations had kicked up a row with many people taking to social media highlighting that the Prime Minister’s Citizen Assistance and Relief in Emergency Situations (PM CARES) fund was eligible for receiving CSR funds but not chief ministers’ relief fund.

The ministry had pointed out that only contributions to state disaster management authorities will qualify as eligible CSR spending and not contributions made towards chief minister’s relief fund or state relief fund. The official quoted above said that an amendment to schedule seven of companies Act, 2013 dealing with how companies can spend their CSR funds notified on 27 February 2014 has omitted funds set up by state governments from the list, while retaining Prime Minister’s relief fund (PMRF) and any other fund set up by the Central Government.

Companies with a net worth of at least ₹500 crore or revenue of ₹1,000 crore or net profit of ₹5 crore should spend at least 2% of their net profit on CSR. Indian businesses spend about ₹15,000 crore a year on CSR.

“Chief Minister’s Relief Fund (CMRF) or any state fund has not been included as an eligible fund under Schedule VII of the Companies Act 2013 since 1 April 2014, the date from which the Schedule dealing with eligible CSR contributions came into force,” said the official, who spoke on condition of anonymity.

The ministry had in March clarified that spending by businesses to reduce poverty and malnutrition, offering healthcare to fight the coronavirus pandemic and disaster relief would qualify as eligible CSR spending.