New Delhi, 25 May 2021: Corporates who contributed to the PM
CARES fund on March 31, beyond their prescribed CSR limit will be able to
offset the excess CSR spent against their CSR obligation in the next financial
year.
As per the government notification, any contribution to ‘PM
CARES Fund’ on 31.03.2020, which is over and above the minimum CSR amount, can
be offset against the requirement to spend under section 135(5) for FY 2020-21.
The notification, however, does not mention any ‘offsetting’
provision for excess CSR money contributed to PM CARES before March 31, 2020.
The clarification from the Ministry of Corporate Affairs
(MCA) has come after several corporates made representations to Ministry for
setting off the excess CSR amount spent by the companies in FY 2019-20 by way
of contribution to ‘PM CARES Fund' against the mandatory CSR obligation for FY
2020-21.
Earlier, on the day before the closure of financial year
(30th March 2020), the government had appealed to the MDs/CEOs of top 1,000
companies in terms of market capitalisation, to contribute generously to "Prime
Minister's Citizen Assistance and Relief in Emergency Situations Fund" (PM
CARES Fund).
In the appeal, the Ministry of Corporate Affairs had
mentioned that such contribution may, include the unspent CSR amount, if any,
and an amount over and above the minimum prescribed CSR amount for FY 2019-20,
which can later be offset against the CSR obligation arising in subsequent
financial years.
What if a corporate made excess contribution before March
31, 2020?
The notification, however, does not mention the provision
for offsetting excess CSR spent if the contribution to PM CARES is made before
March 31, 2020.
The MCA appeal for contribution to PM CARES and special
provision for offsetting CSR obligation came on March 30. Thus, as per the notification, the benefit of
the abovementioned provision is valid for only those corporates who made excess
of CSR contribution to PM CARES on one single day which is March 31, 2020.
Unspent CSR money from previous years to be factored
However, the government clarified that the excess CSR money
will be calculated after factoring in any unspent CSR amount remaining with the
company over the previous years.
Also, the Chief Financial Officer of such companies shall
have to certify that the contribution to "PM-CARES Fund" was indeed made on
31st March 2020 in pursuance of the appeal.
The MCA has also directed the companies to disclose the
details of such contributions separately in the Annual Report on CSR as well as
in the Board’s Report for FY 2020-21.
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