World has seen a never seen before situation with COVID-19. The biggest of countries going under lockdown. The pharmaceutical companies and NGO’s are working hand in hand. On one pharmaceutical companies are preparing drugs and vaccines and on the other hand NGOs are working for helping the poor and needy in these times of lockdown. In such situation corporate sector has also risen to the occasion backed by government’s announcements.
In this article we will discuss various announcements made by government on CSR spending on COVID Activities.
Meaning of Corporate Social Responsibility (CSR)
Section 135(1) of the Companies Act, 2013 contains provisions regarding spending on various CSR activities by companies. The provisions are as follows:-
- All companies, its holding company and subsidiary company, or
- Any foreign company having branch office or project office in India
That fulfil following conditions:-
- Have net worth of Rs.500 crores or more or turnover of Rs.1000 crore or more , or
- A net profit of Rs.5 crore or more
During immediately preceding three years, shall contribute at least 2% of its average net profits to CSR activities in every financial year.
For the companies that have not completed three years, the average profits for all the years since its incorporation will be calculated.
Relevance of CSR in COVID-19 times
The aim of introducing CSR was to ensure that companies which are earning well should contribute to cause of the society. The earnings of corporate sector are result of various components of society only be it consumers, employees etc. As the company takes from society, so it needs to do something for society as well.
In times of COVID-19, the country needs the support from all sectors of society. The sectors like health infrastructure, vaccine camps, testing facilities, food and shelter for poor needs most support.
Keeping in view the same, government made some announcements where it included spending on Covid Activities as CSR activity. Let us the announcements.
Government Announcements on CSR spending on COVID Activities
COVID is declared as pandemic by WHO and a national disaster by Indian Government. In wake of same government made following announcements for CSR spending on COVID Activities-
|COVID-19 expenses recognised as CSR activity||Funds spent on activities relating to promotion of health care, including preventive health care and sanitation and disaster management aimed at COVID-19 management.
(Circular No.10/2020 dated 23rd March,2020)
|Contribution to PM-CARES Fund is a CSR Activity||MCA announced that contribution to PM-CARES Fund will be considered for the purpose of CSR activity by the company.
(Memorandum dated 28th March,2020)
|Research for COVID related drugs or vaccines||Any company which is engaged in research and development of new vaccine, drugs, and medical devices with specified institutes then such expenses will be included for CSR Activity. It can be done during financial years 2020-2021, 2021-2022 and 2022-23.
The conditions for the same are:-
(Notification GSR 526(E) dated 24th Aug,2020)
|Awareness Campaign/Vaccination Programs||Carrying out awareness campaign and vaccination programmes will also be included as an eligible CSR Activity.
(Circular No.01/2021 dated 13th January 2021)
|Building temporary COVID-Care facilities||The funds spent for setting up makeshift hospitals and temporary COVID-Care facilities is an eligible CSR Activity.
(Circular No.05/2021 dated 22nd April,2021)
|Facilitating oxygen generation and supply||Any spending for creating health infrastructure for COVID-Care, setting up for plants for oxygen generation or storage. Supply of concentrators, ventilators, oxygen cylinders and other medical equipment to counter COVID-19 will also be considered as CSR Activity.
(Circular No.09/2021 dated 5th May,2021)
|Vaccination camps for people other than employees||Organising vaccination camps for people other than employees and their families will also be included as a CSR Activity.
(Circular No. 13/2021 dated 30th July,2021)
The above announcements regarding CSR spending on COVID activities proved to be a great help to the society. The companies came forward and helped by providing medical aid to the infected people and their family members. CSR spending has been an integral part of companies cashflow, however announcing inclusion of COVID relief measures for the same by government gave it a direction that was need of the hour.