The COVID pandemic has brought an unprecedented crisis slowing economic activities resulting in millions of job losses. Following the COVID outbreak, India witnessed a phenomenon called reverse migration where labourers and daily-wage workers moved back to their villages as they lost their livelihood in cities.
The already poor health care system of India has also been getting overwhelmed with a large number of COVID infected people unable to access proper medical care. The educational institutions were also shut due to the strict COVID protocols imposed by the government.
Amid all this chaos, the government has appealed to all the corporates to generously help and support the people and communities by their COVID relief initiatives. Accordingly, the government allowed COVID relief initiatives to become part of corporates’ CSR activity. The PM CARES was also launched towards the end of March 2020 so that financial resources can be accumulated to help the government’s fight against COVID.
What is the connection between CSR and COVID relief?
This has led many corporates in joining hands with the government and also doing separate activities in the areas of health, livelihood, online education etc. Many corporates have opened their chest for ensuring safety of frontline workers and also help those people facing survival issues amid the crisis. The corporates are also encouraged to do so as the government allowed many COVID relief measures as their CSR activities.
But, what COVID related corporate initiatives come under their Corporate Social Responsibility (CSR) activities? Is donation to PM CARES a CSR activity? Whether supporting your employees during these tough times count as part of your CSR programme? Whether donation to the CM relief fund also comes under CSR provisions?
The first and foremost is the Centre’s notification related PM CARES. The government has notified that donation to PM CARES will be eligible for CSR expenses on the lines of the PM National Relief fund. "This notification shall be deemed to have come into force on 28th March, 2020," the government said while inserting this clause in the CSR policy provisions.
Further, the Union Ministry of Corporate Affairs has been releasing guidelines to clear doubts related to CSR provisions applicable for corporates’ COVID related efforts and initiatives. TheCSRUniverse.com brings you answers to your questions on CSR and COVID related initiatives.
Frequently Asked Questions (FAQs): CSR expenditure &COVID-19 activities
Q: Whether contribution made to ‘PM CARES Fund’ shall qualify as CSR expenditure?
A: Yes. All the contributions made to ‘PM CARES Fund’ shall qualify as CSR expenditure under item no (viii) of Schedule VII of the Companies Act, 2013.
Q: Whether contributions made to ‘Chief Minister’s Relief Funds’ or ‘State Relief Fund for COVID-19’ shall qualify as CSR expenditure?
A: No. 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.
Q: Whether contribution made to the State Disaster Management Authority shall qualify as CSR expenditure?
A: Yes. All the contributions made to the State Disaster Management Authority to combat COVID-19 shall qualify as CSR expenditure under item no (xii) of Schedule VII of the 2013.
Q: Whether spending of CSR funds for COVID-19 related activities shall qualify as CSR expenditure?
A: Yes. Spending CSR funds for COVID-19 related activities shall qualify as CSR expenditure depending on the nature of spent. The use of CSR fund is allowed for promotion of health care including preventive health care and sanitation, and disaster management.
Q: 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?
A: No. 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.
Q: Whether payment of wages made to casual /daily wage workers during the lockdown period can be adjusted against the CSR expenditure of the companies?
A: No. 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.
Q: Whether payment of ex-gratia to temporary /casual /daily wage workers shall qualify as CSR expenditure?
A: Yes. 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 one-time exception provided there is an explicit declaration to that effect by the Board of the company, which is duly certified by the statutory auditor.
