Contributions to PM CARES Fund qualify as CSR expenditure, but not those made to CM’s Relief Fund: MCA

Ministry of Corporate Affairs, Government of India has issued a circular which states that while a contribution made to ‘PM CARES Fund’ shall qualify as CSR expenditure, that same shall not hold true for any such contribution made to Chief Minister’s Relief Fund or State Relief Fund for COVID-19.

The circular was issued on April 10 as a FAQ ‘in response to the Ministry receiving several references/ representations from various stakeholders seeking clarifications on eligibility of CSR expenditure related to COVID- 19 activities’, it says.

While contributions made to PM-CARES Fund has been stated to be eligible as a CSR contribution under Item No viii of Schedule VII of the Companies Act, 2013, any contribution to the Chief Minister’s Relief Fund or State Relief Fund for COVID-19 is not included in Schedule VII of the Companies Act, 2013. ‘Therefore, any contribution to such funds shall not qualify as admissible CSR expenditure,’ the circular says.

Nonetheless, contribution to State Disaster Management Authority to combat COVID-19 and spending CSR funds for COVID-19 related activities will qualify as CSR expenditure, the MCA circular added.

The circular also said that since payment of salary/ wages to employees or temporary/casual/daily wage workers during the lockdown period is a moral obligation of the employers, the same shall not qualify as admissible CSR expenditure.

Subject to an explicit declaration by the Board of the company, which is also duly certified by the statutory auditor, if any ex-gratia payment is made to temporary/casual/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 an one- time exception, it added.