It has been announced by the Ministry of Corporate Affairs (MCA) that funds spent on measures to tackle the Covid-19 outbreak will be counted towards the corporate social responsibility (CSR) activity of companies.
A notification has been issued regarding the same. It contains various norms of the announcement by the ministry of corporate affairs. The notification said, “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, decision of the 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.”
Highlights of the announcement
- Spending of CSR fund for COVID-19 is eligible CSR activity
- Funds spent on promotion of healthcare, including healthcare and sanitation would be within the definition of a company’s CSR obligations
- Schedule 7 of CSR policy may be interpreted liberally for this purpose
The MCA said that funds spent on promotion of healthcare, including preventive healthcare and sanitation and on disaster management would be within the definition of a company’s CSR obligations.
The circular clarified that the broad 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.
Welcoming the move, Pavan Kumar Vijay founder of Corporate Professionals, suggested a government portal for posting requirements to coordinate efforts and avoid duplication. “For the purpose, it is suggested that the Government may immediately create a portal on which specific requirements by way of equipment, medicines may be posted and the corporates may be permitted to contribute in cash or kind towards those specific requirements,” he said.
As per the amended Companies Act, the government has made it mandatory for companies to send 2% of their average net profit of the last year on CSR activities. Many companies will lend a helping hand after the announcement from the MCA. As the funds spent on COVID-19 will come under their CSR activities. It was a praiseworthy step that was taken by the ministry.
The government is trying to find out the best possible solution for this pandemic and taking all safety measures. With the announcement, the Government of India recently declared a lock down of 21 days across the nation.