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Keeping in view the spread of the novel Corona Virus (COVID-19) in India, the Government of India declared it as a ‘notified disaster’ vide MCA’s notification dated 23 March 2020. Since this notification allowed for liberal interpretation of the items enlisted in Schedule VII under Section 135 of the Companies Act 2013, there remained significant ambiguity regarding what constituted as admissible CSR spending for companies. This ambiguity existed especially concerning donations made to States’ Chief Minister’s Relief Funds or COVID-19 Relief Funds. 

On 10 April 2020, the Ministry of Corporate Affairs (MCA) issued FAQs on CSR related to COVID-19 vide its General Circular No. 15/2020 which helps clarify these concerns regarding the deployment of CSR funds for COVID-19 relief.

The FAQs state clearly that contributions made towards the PM CARES fund shall be covered under CSR, while funds given to Chief Minister's Relief Fund or State Relief Fund for COVID-19 shall not qualify as admissible CSR expenditure. However, the notification adds that contributions made to the State Disaster Management Authority to combat COVID-19 shall qualify as CSR expenditure under item no (xii) of Schedule VII. 

In an effort to mobilise greater CSR funding to combat the coronavirus, the Tamil Nadu government has announced that all contributions made to the Chief Minister’s Public Relief Fund (CMPRF) towards efforts to combat COVID-19 will be allocated to the Tamil Nadu State Disaster Management Authority.  

The notification also allows for ex-gratia payments made to temporary/casual/daily wage workers to qualify under CSR as a one-time exception. This is possible, provided there is an explicit declaration to that effect by the Board of the company and duly certified by the statutory auditor. 

In a nutshell, here is what the notification conveys: 

Admissible CSR Expenditure Non-Admissible CSR Expenditure
  • Contributions made to PM CARES Fund
  • Contributions made to State Disaster Management Authority
  • Spending of CSR funds for various activities related to COVID-19 relief under items nos. (i) and (xii) of the Schedule VII relating to the promotion of health care including preventive health care and sanitation, and disaster management
  • Ex-gratia payments to temporary/casual/daily wage workers for COVID 19 relief, over and above the disbursement of wages
  • Contributions made to Chief Minister’s Relief Fund
  • Contributions made to State Relief Funds for COVID-19
  • Payment of salary to employees and workers, during lockdown period
  • Payment of wages made to casual/daily wage/contractual labour, during the lockdown period

The Social Impact Team at Invest India has created a repository of 32 State & Central Funds accepting donations for COVID relief as well as a list of research funds, tech incubators, and start-ups focused on COVID-19 intervention that can be supported as CSR spending.

Please reach out for further details. 

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