Donations by firms to PM CARES fund will qualify as CSR1 min read . Updated: 29 Mar 2020, 11:31 PM IST
- Firms with a net worth of ₹500 cr, ₹1,000 cr revenue or net profit of ₹5 cr should spend at least 2% of profit on CSR
The ministry of corporate affairs (MCA) on Sunday said donations to the Prime Minister’s emergency fund set up to fight the Covid-19 pandemic will qualify as corporate social responsibility (CSR) spending that companies are mandated to make.
Finance and corporate affairs minister Nirmala Sitharaman tweeted that donations from CSR funds can now be made to the Prime Minister’s “Citizen Assistance and Relief in Emergency Situations" (PM CARES) fund. The minister also tweeted an MCA notification, which said the fund was set up primarily to deal with any emergency or distress situation such as the one posed by the Covid-19 pandemic. “It is clarified that any contribution made to the PM CARES fund shall qualify as CSR expenditure under the Companies Act 2013," it said.
Firms spend about ₹15,000 crore on CSR annually, according to official estimates. The Companies Act stipulates that businesses 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. Any lapse in meeting this obligation should be explained in the annual financial statement. MCA had last week clarified that firms could spend their CSR funds to fight the coronavirus disease, which has been notified as a disaster. The activities for which the CSR fund could be used include promoting healthcare, including preventive care, and disaster management, which includes relief, rehabilitation, and reconstruction activities. Firms are given the flexibility to make a broad interpretation of the areas specified for CSR funds.
Corporate, government and philanthropic entities including the Airports Authority of India, Tata Trusts and Reliance Industries (RIL), as well as business leaders like Vedanta’s Anil Agarwal, and Anand Mahindra have pledged financial support for various activities to fight the pandemic. RIL has begun production of face masks, while the Mahindra Group is venturing into producing ventilators. Helping the needy, especially the local community in areas where businesses have production facilities, also helps some of their own workers who are part of the local community.