MCA Clarification on CSR funds for COVID–19
MCA Clarification on CSR funds for COVID–19
Considering the second wave of the COVID-19 pandemic 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 funds for setting up makeshift covid-19 hospitals and temporary care facilities would be considered as the corporate social responsibility (CSR) activity of firms.
Know more about the Filing of eForm CSR-1
Synopsis of MCA Notification
MCA announced that Spending of CSR funds for setting up makeshift hospitals and temporary COVID care facilities is an eligible CSR activity under item no. (i) and (xii) of Schedule VII of the companies Act, 2013 relating to the promotion of health care, including preventive health care and disaster management.
CSR funds for COVID–19
Last year, when the first wave of covid-19 cases had hit in March and the disease was declared a pandemic by the World Health Organization (WHO), the MCA had announced that spending funds for covid-19 were an eligible CSR activity.
The Government clarified that the funds spent on measures to tackle the Covid-19 outbreak would be considered as the corporate social responsibility (CSR) activity of firms.
The funds can be spent on various activities related to COVID-19 on the promotion of healthcare; including preventive healthcare and sanitation will be considered as the company’s CSR obligations.
Know more about the CSR funds for COVID–19
Clarification on CSR funds for COVID–19 Vaccination
Wide a Notification dated January 22, 2021, the MCA had also clarified that spending funds on awareness campaigns and public outreach programs to promote COVID -19 vaccination against infectious disease would also be considered an eligible CSR activity.
Know more about Clarification on CSR funds for COVID–19
Spending CSR funds for Setting up Makeshift Hospital
As mentioned above, the funds spent for Setting up makeshift hospitals and Temporary Covid Care facilities will be considered as the company’s CSR obligations. The companies can undertake CSR activities in consultation with State Government subjects to fulfillment of Companies (CSR Policy) Rules, 2014.
The official notification of MCA related to the Clarification on CSR funds for COVID–19 is as follows:GeneralCircularNo5_22042021
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 (CSR) for COVID – 19.
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.
By clicking on the Explore CSR Data option from the Home page of the National CSR Data Portal, the applicant firm can get the CSR details:
- State Wise CSR Details
- Development Sector Wise CSR Details
- Company-Specific CSR Data
- Dynamic CSR Report
- CSR MIS Report
Schedule VII of Companies Act, 2013
Spending of CSR funds for setting up makeshift hospitals and temporary COVID care facilities activities which may be included by companies in their Corporate Social Responsibility Policies Activities relating to item no. (i) and (xii) of Schedule VII of the companies Act, 2013. Item no. (i) and (xii) of Schedule VII of the companies Act, 2013 is as follows:
- Eradicating hunger, poverty, and malnutrition, promoting health care including preventive health care and sanitation including contribution to the Swach Bharat Kosh set-up by the Central Government for the promotion of sanitation and making available safe drinking water
- Disaster management, including relief, rehabilitation, and reconstruction activities
Post by Renu Suresh
Renu is experience content writer specialised in compliances and company rules.