MCA clarify eligibility for CSR expenditure in Covid-19

What is the mean of CSR?

CSR stands for Corporate Social Responsibility is a Management Concept Under which companies integrate social and environmental concerns in the operation of their businesses and interactions with their stakeholders.

Clarification of MCA for CSR expenditure eligibility in Covid-19 

Do the contributions to “PM-Care Fund” qualify as CSR expenditure?

The purpose of initiative “PM-CARES Fund” is only to provide relief to all affected people in pandemic of covid 19. Accordingly, it is clarified that any contribution to the PM-CARES fund has qualified as a CSR expenditure under the Companies Act 2013.

Will contributions to the “Chief Minister's Relief Fund” or the “State Relief Fund” for COVID-19 qualify as CSIR expenditure?

The 'Chief Minister Relief Fund' or State Relief Fund for COVID-19 is not included in Schedule VII of the Companies Act, 2013, and hence any contribution to such funds will not qualify as an allowable CSR expenditure.

Does the contribution of State Disaster Management Authority qualify as CSR expenditure?

MCA clarifies eligibility for CSR expenditure in Covid-19 about the Contribution to the State Disaster Management Authority to counter COVID-19 has qualified as a CSR expenditure under item number (xii) of Schedule VII of 2013 and clarified the General Circular No. 10/2020 dated March 23, 2020.

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Does CSR fund expenditure for COVID-19 related activities qualify as CSR expenditure?

The Ministry has clarified the General Circular No. 10/2020 of March 23, 2020, that spending CSR funds for COVID-19 related activities would qualify as CSR expenditure. It is further clarified that funds can be spent on various activities related to COVID-19 under the items. (I) and (xii) of Schedule VII relating to the 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, the items in Schedule VII are broadly based and may be interpreted liberally for this purpose.

Can the payment of salary/salary to employees and workers, including contract labor, be adjusted against the CSR expenditure of companies during the lockdown period?

Under normal circumstances, payment of salary/wages is a contractual and statutory obligation of the company.

Similarly, the payment of salary/wages to employees and workers even during the lockdown period is an ethical obligation of employers, as they have no alternative source of employment or livelihood during this period.

Thus, the payment of salaries/wages to employees and workers during the lockdown period (including the imposition of other social distribution requirements) will not qualify as an acceptable CSR expense.

Can the salary pay to casual/daily wage workers during the locking period be adjusted against the CSR expenditure of the companies?

Temporary or contingent or daily wage payments during the lockdown period are part of the ethical/humanitarian/contractual obligations of the employees of the company who registered with MCA by company registration and apply to all registered companies irrespective of any legal obligation for CSR contribution under Section 135 of the Companies Act 2013.

Therefore, payment of wages to temporary or casual or daily wage workers during the lockdown period will not count towards CSR expenditure.

Is prepayment paid for temporary/contingent/daily wage workers qualify as CSR expenses?

It is clarified by MCA, If any prepayment is made for disbursement of wages for temporary/casual laborers / daily wage laborers and specifically for fighting COVID 19, CSR will be admissible for expenditure, as there is no exception for the company. A clear declaration of intent by the board, duly certified by the statutory auditor.