Eligibility of CSR expenditures made for COVID-19 activities

My Dear readers, followers, taxpayers & clients,  
Welcome to my blog. Get yourself update with changes in tax structures. 

MCA has issued FAQs on eligibility of CSR expenditures made for COVID 19 activities.

General Circular No. 15/2020. F. No. CSR-01/4/2020-CSR-MCA dt. 10.04.2020
Government of India 
Ministry of Corporate Affairs 
 The Ministry has been receiving several references/ representations from various stakeholders seeking clarifications on eligibility of CSR expenditure related to COVID-19 activities. In this regard, following are the FAQs along with clarifications. These are as follows. For the ease of simplicity to my readers, viewers, clients, I have darkened the specific words. All of You will know easily.

S. No.
Frequently Asked
Questions (FAQs)
Reply
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 ex- gratia 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 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.
 See You all in the next blog.


9421233228 kulkarnisukumar@gmail.com

Comments

Popular posts from this blog