The Ministry of Corporate Affairs (MCA) on Friday clarified that the donations made by the companies to the ‘Chief Minister’s Relief Fund’ or ‘State Relief Fund’ in the wake of the novel coronavirus pandemic does not count as Corporate Social Responsibility (CSR).
This clarification comes after MCA allowed corporate donations to Narendra Modi's PM-CARES Fund which was set up to collect public contributions to fight COVID-19.
In the COVID-19 related FAQs released by MCA on CSR, it said that the contributions made to 'PM-CARES Fund' shall qualify as CSR expenditure under item no (viii) of Schedule VII of the Companies Act, 2013. It further says that ‘Chief Minister’s Relief Fund’ or ‘State Relief Fund for COVID-19' is not included in the Schedule VII of the Companies Act, 2013 and therefore any contribution to such funds shall not qualify as admissable CSR expenditure.
To the uninitiated, companies with a net profit of Rs 5 crore or a net worth of Rs 500 crore or a turnover of Rs 1,000 crore have to spend 2 per cent of their average net profits of the last three years as CSR.
The FAQs also stated that payment of salary/wages to employees and workers during the lockdown period is a moral obligation of the employers and thus it shall not qualify as admissable CSR expenditure.
However, MCA stated that if any ex-gratia payment is made to temporary/casual workers over and above the disbursement of the wages, specially for fighting COVID-19, the same shall be admissable towards CSR expenditure as a one-time exception.