MCA Issued COVID19 related FAQ’s on CSR Contribution

MCA Issued COVID19 related FAQ’s on CSR Contribution

The Ministry of Corporate Affairs vide General Circular No. 15 /2020, F. No. CSR-01/4/2020-CSR-MCA dated 10th April 2020 has issued and published COVID-19 related Frequently Asked Questions (FAQs) on Corporate Social Responsibility (CSR).

Major Update:

”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.”
Summary in Short:

1. What Shall Qualify for CSR Expenditure:

  • Contribution to PM Cares Fund under item no (viii) of Schedule VII.\
  • Contribution to State Disaster Management Authority under item no (xii) of Schedule VII.
  • Spending CSR funds for COVID-19 related activities under items nos. (i) and (xii) of Schedule VII relating to promotion of health care including preventive health care and sanitation, and disaster management.
  • Ex-gratia payment is made to temporary/casual workers/ daily wage workers over and above the disbursement of wages.

2. What shall not Qualify as CSR Expenditure

  • Contribution to Chief Minister’s Relief Funds’ or ‘State Relief Fund for COVID-19’.
  • Payment of salary/wages to employees and workers, including contract labour.
  • Payment of wages made to temporary/casual /daily wage workers.

3. Frequently Asked Questions (FAQ’s):

 

S. No.  Frequently Asked
Questions (FAQs) 
Reply By MCA
1 Whether contribution
made to ‘PM CARES Fund’
shall qualify as CSR
expenditure?
Contribution made to ‘PM CARES Fund’ shall
qualify as CSR expenditure under item no (viii) of
Schedule VII of the Companies Act, 2013 and it
has been further clarified vide Office
memorandum F. No. CSR-05/1/2020-CSR-MCA
dated 28th March, 2020.
2 Whether contribution
made to ‘Chief Minister’s
Relief Funds’ or ‘State
Relief Fund for COVID-19’
shall qualify as CSR
expenditure?
‘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.
3 Whether contribution
made to State Disaster Management Authority
shall qualify as CSR
expenditure?
Contribution made to State Disaster
Management Authority to combat COVID-19 shall qualify as CSR expenditure under item no
(xii) of Schedule VII of the 2013 and clarified vide
general circular No. 10/2020 dated 23rd March,
2020.
4 Whether spending of CSR
funds for COVID-19 related
activities shall qualify as
CSR expenditure?
Ministry vide general circular No. 10/2020 dated
23rd March, 2020 has clarified that spending CSR
funds for COVID-19 related activities shall qualify
as CSR expenditure. It is further clarified that
funds may be spent for various activities related
to COVID-19 under items nos. (i) and (xii) of
Schedule VII relating to 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, items in
Schedule VII are broad based and may be
interpreted liberally for this purpose
5 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?
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.
6 Whether payment of wages made to casual /daily wage workers during the lockdown period can be adjusted against the CSR expenditure of the companies? 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.
7 Whether payment of exgratia to temporary /casual
/daily wage workers shall
qualify as CSR
expenditure?
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 onetime exception provided there is an explicit
declaration to that effect by the Board of the
company, which is duly certified by the statutory
auditor.

4. Notification Link: 

COVID19 related FAQ’s on CSR Contribution

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