Ministry of Corporate Affairs (MCA) has issued a notification to clarify the eligibility of CSR expenditure related to COVID-19 activities.
Ministry of Corporate Affairs (MCA) has issued a notification
to clarify the eligibility
of CSR expenditure related to COVID-19 activities.
In this regard, a
set of FAQs along with clarifications as mentioned below have been provided for a better understanding of the stakeholders:
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S. No.
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Frequently Asked
Questions (FAQs)
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Reply
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1.
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Whether
contribution made to ‘PM CARES Fund’ shall qualify as CSR expenditure?
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Contribution
made to ‘PM CARES Fund’ shall qualify as CSR expenditure under item no (viii)
of Schedule VII of the Companies Act, 2013 and it has been further clarified
vide Office memorandum F. No. CSR-05/1/2020-CSR-MCA dated 28th March, 2020.
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2.
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Whether contribution
made to ‘Chief Minister’s Relief Funds’ or ‘State Relief Fund for COVID-19’ shall qualify as CSR expenditure?
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‘Chief
Minister’s Relief Fund’ or ‘State Relief Fund for COVID-19’ is not included
in Schedule VII of the Companies Act, 2013 and therefore any contribution to
such funds shall not qualify as admissible CSR expenditure.
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3.
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Whether
contribution made to State Disaster Management Authority shall qualify as CSR
expenditure?
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Contribution
made to State Disaster Management Authority to combat COVID-19 shall qualify
as CSR expenditure under item no (xii) of Schedule VII of the 2013 and
clarified vide general circular No. 10/2020 dated 23rd March, 2020.
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4.
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Whether spending
of CSR funds for COVID-19 related activities shall qualify as CSR
expenditure?
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Ministry vide general
circular No. 10/2020 dated 23rd March, 2020 has clarified that spending CSR funds
for COVID-19 related activities shall qualify as CSR expenditure. It is
further clarified that funds may be spent for various activities related to
COVID-19 under items nos. (i) and (xii) of Schedule VII relating to promotion
of health care including preventive health care and sanitation, and disaster
management. Further, as per general circular No. 21/2014 dated 18.06.2014,
items in Schedule VII are broad based and may be interpreted liberally for
this purpose.
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5.
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Whether payment
of salary/wages to employees and workers, including
contract labour,
during the lockdown period can be adjusted against the CSR
expenditure of
the companies?
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Payment of
salary/ wages in normal circumstances is a contractual and statutory obligation
of the company. Similarly, payment of salary/ wages to employees and workers
even during the lockdown period is a moral obligation of the employers, as
they have no alternative source of employment or livelihood during this period.
Thus, payment of salary/ wages to employees and workers during the lockdown period
(including imposition of other social distancing requirements) shall not
qualify as admissible CSR expenditure.
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6.
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Whether payment
of wages made to casual /daily wage workers during the lockdown period can be
adjusted against the CSR expenditure of the companies?
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Payment of wages
to temporary or casual or daily wage workers during the lockdown period is
part of the moral/ humanitarian/ contractual obligations of the company and
is applicable to all companies irrespective of whether they have any legal
obligation for CSR contribution under section 135 of the Companies Act 2013.
Hence, payment of wages to temporary or casual or daily wage workers during the
lockdown period shall not count towards CSR expenditure.
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7.
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Whether payment
of exgratia to temporary /casual /daily wage workers shall qualify as CSR expenditure?
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If any ex-gratia
payment is made to temporary / casual workers/ daily wage workers over and above
the disbursement of wages, specifically for the purpose of fighting COVID 19,
the same shall be admissible towards CSR expenditure as a onetime exception provided
there is an explicit declaration to that effect by the Board of the company,
which is duly certified by the statutory auditor.
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