COVID-19 related Frequently Asked Questions (FAQs) on Corporate Social Responsibility (CSR)
Further to the clarification
issued by the Ministry of Corporate Affairs (MCA) on contributions to PM CARES
fund as eligible CSR activity under item number viii of Schedule VII of
Companies Act, 2013 the MCA has received several representations from various
stakeholders seeking clarification on eligibility of CSR expenditure related to
COVID-19 activities. As a consolidated response to all the representations, the
MCA has released a set of FAQ’s along with clarifications for better
understanding of the stakeholders on CSR expenditure related to COVID-19
activities.
Whether contribution made to
‘PM CARES Fund’ shall qualify as CSR expenditure?
MCA: 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.
Whether contribution made to
‘Chief Minister’s Relief Funds’ or ‘State Relief Fund for COVID-19’ shall
qualify as CSR expenditure?
MCA: ‘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.
Whether contribution made to
State Disaster Management Authority shall qualify as CSR expenditure?
MCA: 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.
Whether spending of CSR funds
for COVID-19 related activities shall qualify as CSR expenditure?
MCA: 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 circular No. 21/2014 dated
18.06.2014, items in Schedule VII are broad based and may be interpreted
liberally for this purpose.
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?
MCA: 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.
Whether payment of wages made
to casual /daily wage workers during the lockdown period can be adjusted
against the CSR expenditure of the companies?
MCA: 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.
Whether payment of ex-gratia
to temporary /casual /daily wage workers shall qualify as CSR expenditure?
MCA: 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.