Funds spent on COVID-19 to be treated as CSR activity: MCA
Keeping in mind the spread of novel Coronavirus (COVID-19) cases in India, the ministry of corporate affairs (MCA) today said the CSR funds spent for COVID-19 would be treated as eligible CSR activity.
Keeping in mind the spread of novel Coronavirus (COVID-19) cases in India, the ministry of corporate affairs (MCA) today said the CSR funds spent for COVID-19 would be treated as eligible CSR activity. According to an MCA order, the coronavirus outbreak will be treated as a notified disaster.
The notification read, "Keeping in view of the spread of novel Coronavirus (COVID-19) in India, its declaration as a pandemic by the World Health Organization (WHO), and the decision of Government of India to treat this as a notified disaster. It is hereby clarified that spending of CSR funds for COVID-19 is eligible CSR activity."
It clarified, the board based items as per Schedule 7 of the CSR policy, which deals with the activities that constitute CSR activity, may be interpreted liberally for this purpose.
The funds spent on the promotion of healthcare, including preventive healthcare and sanitation and on disaster management would be within the definition of the company's CSR obligations.
Companies with a net worth of Rs 500 crore or more, or an annual turnover of Rs 1,000 crore or more, or net profit of Rs 5 crore are required to spend two per cent of their average net profits of three years on CSR activities.
India is the first country in the world to make corporate social responsibility (CSR) mandatory, following an amendment to the Companies Act 2013. As per the amended Companies Act, the government has made it mandatory for companies to spend 2 per cent of their average net profit of the last three years on CSR activities.