Govt amends norms; company contributions to PM CARES Fund to qualify as CSR expenditure
The government has amended the norms whereby contributions by corporates to the PM CARES Fund will qualify as CSR spending under the companies law.
Under the Companies Act, 2013, certain class of profitable entities are required to shell out at least two percent of their three-year annual average net profit towards Corporate Social Responsibility (CSR) activities in a particular fiscal.
In March, the corporate affairs ministry said contributions by companies to the PM-CARES Fund would be considered as CSR spending. The decision by the ministry, which is implementing the Act, came amid the coronavirus pandemic.
Now, the ministry has made changes in Schedule VII of the Act to provide for the provision. Schedule VII pertains to CSR activities.
"In Schedule VII, item (viii), after the words "Prime Minister's National Relief Fund" the words "or Prime Minister's Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund)" shall be inserted," the ministry said in a notification issued on Tuesday.
The notification would be deemed to have come into force on March 28, it added.
The PM CARES Fund would be utilised to deal with any emergency or distress situation such as coronavirus outbreak.
Under Section 135 of the Companies Act, 2013, every company having net worth of at least Rs 500 crore, turnover of Rs 1,000 crore or more, or a minimum net profit of Rs 5 crore during the immediately preceding financial year, has to make CSR expenditure.
On March 28, four days into the nationwide lockdown to curb the spread of COVID-19, Prime Minister Narendra Modi announced the constitution of the Prime Minister’s Citizen Assistance and Relief in Emergency Situations (PM-CARES) Fund.
As stated in the press release, this fund’s purpose is to specifically cater to the health and economic ramifications caused by the global pandemic. An objective of this fund is the encouragement of public participation to mitigate the issues India is currently facing. The funds collected are also aimed at enhancing research that will help in combating the virus.
(Disclaimer: Additional background information has been added to this PTI copy for context)