Donations To PM-CARES Qualify As CSR, Not To CM Or State Relief Fund: Central Govt

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.

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."

Also Read: Gujarat: Over 200 Farmers Contribute Rs 2,000 Each To PM-CARES To Fight COVID-19