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The Centre has said that contributions made by companies to the Chief Ministers's Relief Fund or the State Relief Fund towards fighting COVID-19 will not be counted as Corporate Social Responsibility (CSR) spending.
The Ministry of Corporate Affairs issued a clarification after receiving a number of requests over the eligibility towards CSR expenditure.
"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," answer to a FAQ issued by the ministry informed.
However, donations made to the recently set up controversial Prime Minister 's Citizen Assistance and Relief in Emergency Situations (PM-CARES) fund or to the State Disaster Management Authority will be allowed under CSR.
In response to a number of requests received, the Ministry of Corporate Affairs has released an FAQ covering common queries regarding the eligibility of CSR expenditure related to COVID-19 activities. #IndiaFightsCoronahttps://t.co/viLVbidNOa
— NSitharamanOffice (@nsitharamanoffc) April 11, 2020
The Ministry of Corporate Affairs has allowed contributions from companies to state disaster management authorities for fighting COVID-19 to be treated as CSR expenditure. pic.twitter.com/LRPr9dMGmH
— NSitharamanOffice (@nsitharamanoffc) April 11, 2020
Companies with a net worth of Rs 500 crore or more, or a turnover of Rs 1,000 crore or more, or a net profit of Rs 5 crore or more in the immediately preceding financial year are mandatorily required to spend 2% of their average net profit of the preceding three years on CSR activities.
Such government-approved CSR activities effort towards eradicating hunger, poverty and malnutrition, and promoting healthcare, education and gender equality.
A Hindustan Times report quoted an anonymous government official reasoning such a decision. He said if CM Relief Fund is included, funds from CSR activities will not flow outside of industrial states like Maharashtra and Gujarat and such states would utilize a major portion of the corpus while it would create a deficit for non-industrial states like Bihar, Bengal and Odisha.
Communist Party of India (Marxist) leader Sitaram Yechury, while criticizing the Modi government said, "Corner all CSR monies for his personally named fund & deny States - who are in the frontline of combatting #COVID19 -- these funds. This is "Cooperative Federalism"? Amend Schedule 7 of Companies Act to permit State govts to access these funds which could save millions of lives."
Corner all CSR monies for his personally named fund & deny States - who are in the frontline of combatting #COVID19 - these funds.
— Sitaram Yechury (@SitaramYechury) April 11, 2020
👆🏾This is "Cooperative Federalism"?
Amend Schedule 7 of Companies Act to permit State govts to access these funds which could save millions of lives https://t.co/s2LkEtkB1e
Also Read: Gujarat: Over 200 Farmers Contribute Rs 2,000 Each To PM-CARES To Fight COVID-19
