Companies can fulfil CSR obligations by donating to PM CARES.

Companies can fulfill CSR obligations by donating: The ministry of corporate affairs (MCA) on Sunday said donations to the Prime Minister’s emergency fund set up to fight the Covid-19 pandemic will qualify as corporate social responsibility (CSR) under the Companies Act 2013.

The emergency fund was created by Prime Minister Narendra Modi on Saturday after his office received numerous requests from people for donations to support the government in its fight against the impact of Covid-19. “People from all walks of life expressed their desire to donate to India’s war against COVID-19,” Modi said, adding the fund has been constituted respecting that spirit.

Firms spend about ₹15,000 crores on CSR annually, according to official estimates. The Companies Act stipulates that businesses with a net worth of at least ₹500 crores or revenue of ₹1,000 crore or net profit of ₹5 crores should spend at least 2% of their net profit on CSR. Any lapse in meeting this obligation should be explained in the annual financial statement.

MCA had last week clarified that firms could spend their CSR funds to fight the coronavirus disease, which has been notified as a disaster. The activities for which the CSR fund could be used include promoting healthcare, including preventive care, and disaster management, which includes relief, rehabilitation, and reconstruction activities. Firms are given the flexibility to make a broad interpretation of the areas specified for CSR funds.

As per the MCA circular, Schedule 7 of the Companies Act, 2013 states, contribution to any fund set up by the central government for socio-economic development and relief qualifies as CSR expenditure.

“People from all walks of life expressed their desire to donate to India’s war against COVID-19,” Modi said, adding the fund has been constituted respecting that spirit.

Corporate, government and philanthropic entities including the Airports Authority of India, Tata Trusts and Reliance Industries (RIL), as well as business leaders like Vedanta’s Anil Agarwal, and Anand Mahindra have pledged financial support for various activities to fight the pandemic. RIL has begun production of face masks, while the Mahindra Group is venturing into producing ventilators. Helping the needy, especially the local community in areas where businesses have production facilities, also helps some of their own workers who are part of the local community.