Contribution by corporates to PM-CARES Fund will be considered as social welfare spending under the companies law, the government has said amid ongoing efforts to deal with the COVID-19 outbreak.
Under the companies law, certain classes of profitable entities have to shell out at least 2% of their three-year annual average net profit towards Corporate Social Responsibility (CSR) activities in a particular fiscal.
“... any contribution made to the PM-CARES Fund shall qualify as CSR expenditure,” Corporate Affairs Minister Nirmala Sitharaman said in a tweet on Sunday.
The Corporate Affairs Ministry, which is implementing the companies law, has issued a memorandum clarifying that money donated by corporates to the fund would be considered as CSR expenditure.
The government has set up the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM-CARES Fund) to deal with any emergency or distress situation in the wake of the COVID-19 pandemic.
“The PM-CARES Fund has been set up to provide relief to those affected by any kind of emergency or distress situation. Accordingly, it is clarified that any kind of contribution made to the PM-CARES Fund shall qualify as CSR expenditure under the Companies Act, 2013,” the Ministry said in the memorandum issued on Saturday.
CSR funds could be utilised for various activities related to COVID-19, including those relating to preventive healthcare and sanitation.
Under Section 135 of the Companies Act, 2013, every company having net worth of at least ₹500 crore, turnover of ₹1,000 crore or more, or a minimum net profit of ₹5 crore during the immediate preceding financial year has to make CSR expenditure.