On 10th April 2020, the Ministry of Corporate Affairs has issued general circular for clarifications of the queries related to Corporate Social Responsibility (CSR) expenditure related to COVID-19 activities.

Some of the frequently asked questions are as follows:

 Q1. Whether contribution made to PM CARES Fund shall qualify as CSR expenditure?

Yes, the 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 through circular dated 28th March 2020.

Q2. 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 Funds or State Relief Fund for COVID-19 is not included in Schedule VII of the Companies Act, 2013 and therefore any contributions to such funds shall not qualify as admissible CSR expenditure.

Q3. Whether contribution made to State Disaster Management Authority shall qualify as CSR expenditure?

The contribution made to State Disaster Management Authority to combat COVID-19 shall qualify as CSR expenditure under item no (xii) of Schedule VII of 2013.

Q4. Whether spending CSR Funds for Covid-19 related activities shall qualify as CSR expenditure?

Ministry vide general circular dated 23 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 and sanitation , and disaster management.

Q5. 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.

Q6. 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.

Q7 Whether payment of exgratia 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 onetime exception provided there is an explicit declaration to that effect by the Board of the company, which is duly certified by the statutory auditor.