Finance Minister Nirmala Sitharaman on Monday (March 23) said that the amount spent by corporates to deal with the novel coronavirus outbreak will be considered as CSR activity under the companies law.
In a circular, the corporate affairs ministry said, “In view of the spread of novel coronavirus in India, its declaration as pandemic by the WHO, and decision of Government of India to treat this as notified disaster, it is hereby clarified that spending of CSR funds for COVID-19 is eligible CSR activity.”
The announcement comes in the backdrop of more than 400 people being tested positive for the COVID-19 infection in the country, eight people succumbing to the same, and as many as 83 districts going under a lockdown to curb the spreading of the deadly coronavirus.
Under the companies law, certain classes of profitable entities have to shell out at least 2 per cent of their three-year annual net profit towards Corporate Social Responsibility (CSR) activities in a particular financial year.
CSR funds could be utilised for various activities related to COVID-19, including those relating to preventive healthcare and sanitation, as per the circular.
A senior official said the CSR funds could be used for direct expenditure to contain the spread, morbidity and mortality due to the disease.
Consultancy Corporate Professionals Group Founder Pavan Kumar Vijay said the ministry’s clarification on CSR was a welcome step.
“For the purpose, it is suggested that the government may immediately create a portal on which specific requirements by way of equipment, medicines, etc may be posted and the corporates may be permitted to contribute in cash or kind towards those specific requirements. This will ensure coordinated efforts and avoid duplication,” he said.
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 immediately preceding financial year has to make CSR expenditure.
(With inputs from agencies)