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Home >News >India >Biz can deploy CSR funds for awareness around covid: MCA
These rules do not recognize activities that benefit staff and biz family members (Mint)
These rules do not recognize activities that benefit staff and biz family members (Mint)

Biz can deploy CSR funds for awareness around covid: MCA

The ministry had revised the CSR rules last year to align these with the requirements for fighting covid-19

Businesses can use their corporate social responsibility (CSR) funds to create awareness about covid-19 but cannot use such funds exclusively on activities that benefit employees and family, the government said in a clarification.

Spending CSR funds for carrying out “awareness campaigns/programmes or public outreach campaigns on covid-19 vaccination programme is an eligible CSR activity" under provisions of law, the ministry of corporate affairs said in a communication to field officials and public.

Such spending will be considered under the Companies Act provisions allowing CSR expenditure towards promotion of healthcare including preventive healthcare and sanitation, promoting education and disaster management, it said.

However, these activities have to be undertaken as per the Companies (CSR policy) Rules of 2014 and related orders. These rules do not recognize activities that benefit only employees and their family members as CSR activities, it added. This prevents businesses from using their CSR funds for vaccination of employees and family.

Employee cost is an expenditure that is taken into account while arriving at the net profit of a company, a small part of which is mandated to be spent on CSR activities. Companies with net worth of 500 crore or more, or turnover of 1,000 crore or more, or net profit of 5 crore-plus, are required to spend 2% of their average net profit of the preceding three years on CSR activities.

The ministry had revised the CSR rules last year to align these with the requirements for fighting covid-19, allowing life sciences companies to spend CSR funds for finding therapies. The restriction on life sciences firms spending CSR funds in activities which are part of their normal course of business was lifted last August.

Also, donations to the Prime Minister’s emergency fund to fight the pandemic was made eligible for CSR spending. However, for contribution to state agencies, only donations to the State Disaster Management Authority qualifies as CSR spending, not contributions to the chief minister’s relief fund.

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