Clarification on CSR funds for COVID–19
Clarification on CSR funds for COVID–19
Considering the spread of novel Coronavirus (COVID-19) in India, the Ministry of Corporate Affairs (MCA) has announced that spending of corporate social responsibility funds (CSR funds) for COVID-19 is an eligible CSR activity of a company. The Government further clarified that spending CSR funds for carrying out awareness campaigns/programs on COVID 19 vaccination would be considered as the corporate social responsibility (CSR) activity of firms.
Corporate Social Responsibility (CSR)
Corporate Social Responsibility (CSR) defines as an organization’s sense of responsibility towards the environment (both ecological and social) and community in which it operates. Companies can fulfill this responsibility by contributing to CSR funds.
Considering the spread of novel Coronavirus in India and the World Health Organization (WHO) declaration of COVID-19 as a pandemic, the central Government of India has decided to treat Coronavirus (COVID-19) as a notified disaster. Hence, the funds spent on measures to tackle the Covid-19 outbreak and the funds spent for carrying out awareness campaigns/programs on COVID 19 vaccination would be considered as the corporate social responsibility (CSR) activity of firms.
Contribution to awareness campaigns on COVID–19 Vaccination
The funds spent on various activities related to COVID-19 vaccination awareness campaigns/programs on the promotion of healthcare; including preventive healthcare and sanitation will be considered as the company’s CSR obligations.
The official notification of MCA related to the Clarification on CSR funds for COVID–19 is as follows:
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The Corporate Social Responsibility concept in India is governed by Section 135 of the Companies Act, 2013 wherein the criteria has been provided for assessing the CSR eligibility of a company, Implementation, and Reporting of their CSR Policies.
Applicability of CSR Provision
According to the Companies Act 2013, certain classes of profitable organizations have to shell out at least 2 percent of the three-year annual net profit towards Corporate Social Responsibility (CSR) activities in a particular financial year.
The companies having the following net-worth during the immediately preceding financial year can make CSR expenditure for COVID – 19 under Section 135 of the Companies Act, 2013, every company having
- The net worth of Rs. 500 Crore or more
- Turnover of Rs. 1000 crore or more
- Net Profit of Rs. 5 crores or more
A foreign corporation having its branch office or project office in India, which fulfills the criteria mentioned above can also make the Corporate Social Responsibility for COVID – 19 vaccination awareness program.
National CSR Data Portal
The National Corporate Social Responsibility Data Portal is an initiative by the Ministry of Corporate Affairs, Government of India to establish a platform to disseminate Corporate Social Responsibility related data and information filed by the companies registered with it
As mentioned above, for CSR contribution, the Government of India established this portal on which specific requirements such as equipment, medicines, will be posted, and the company may be permitted to contribute CSR funds in cash or kind towards those particular requirements.
In the new fiscal year, a significant portion of the CSR funds can transfer to the CSR fund without upsetting commitments to ongoing projects
Modification of Schedule VII of Companies Act, 2013 for COVID – 19
Because of the spread of the novel Corona Virus in India, the Ministry of Corporate Affairs amends Schedule VII under Section 135 of the Companies Act, 2013. According to the Schedule VII of the Companies Act, Corporate Social Responsibility Policies activities are as follows:
- Eradicating extreme hunger and poverty
- Promotion of education
- Promoting gender equality and empowering women
- Producing child mortality and improving maternal health
- Combating human immunodeficiency virus (HIV), acquired immune deficiency syndrome, malaria, and any other diseases
- Employment enhancing vocational skills
- Ensuring environmental sustainability
- Social business project
- Contribution to the National Relief fund of Prime Minister or any other relief fund set up by the Government of India
- Government for socio-economic development and funds for the welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities, and women
Along with these activities, the Government has included disaster management, including relief, rehabilitation, and reconstruction activities as Corporate Social Responsibility (CSR) Activities.
The official notification of the Ministry of Corporate Affairs regarding the changes in the Corporate Social Responsibility (CSR) Activities is as follows:
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