Not just PM CARES fund, all these Covid-19 activities can be treated as CSR expense

Not just PM CARES fund, all these Covid-19 activities can be treated as CSR expense
  • Activities related to COVID-19, including the promotion of healthcare, preventive healthcare, sanitation, disaster management would qualify as CSR spending.
  • The corporate social responsibility rules make it mandatory for large Indian firms to set aside at least 2% of their average net profit for socially responsible expenditures.
  • The government also announced that all donations towards the PM-CARES Fund are eligible for 100% tax deduction.
After the Ministry of Corporate Affairs announced that donations made by companies to the PM CARES Fund would be considered as expenditure on corporate social responsibility, many companies came through with their donations.

However, there are a lot other ways that a company can use their CSR funds to help the country fight Covid-19. Activities related to COVID-19 like promotion of healthcare, preventive healthcare, sanitation, disaster management would qualify for treatment as CSR, as per a circular by the ministry.

“The PM CARES Fund has been set up to provide relief to those affected by any emergency or distress situation. Accordingly, it is clarified that any contribution made to the PM CARES Fund shall qualify as CSR expenditure under the Companies Act 2013,” said a circular by the Ministry of Corporate Affairs.

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The decision comes days after the government decided to include corporates’ spending on checking coronavirus as part of the Corporate Social Responsibility.

Here is what else qualifies as CSR funds, if utilised for Covid-19 related activities:

1.Scientific research for the development of drugs for COVID-19.

2.Manufacture and / or distribution of kits for testing the disease.
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3. Providing quarantine facilities to those affected.

4.Mass training of nurses and paramedical staff.

5. Distribution of food and arrangement of shelter for doctors and paramedical staff.
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6. Opening of sanitation facilities (mobile and stationary) and training of workers for the same.

7. Distribution of food/medicine/financial support to the poor/daily wage earners who are forced to stay at home during the lockdown/curfew.

8. Arrangement of ambulance and corpse carriers (if required)
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9. Mass supply of protective gear (gloves, caps, masks etc.)

10. Transport facilities for medical and paramedical staff and other supporting staff.

What is CSR?

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The corporate social responsibility rules make it mandatory for large Indian firms to set aside at least 2% of their average net profit for socially responsible expenditures. The norms are applicable to firms with at least ₹5 crore net profit of ₹1,000 crore turnover or ₹500 crore net worth. The government decides the list of activities included under CSR.

For the government which has been scrambling for funds to tackle the Covid-19 crisis, this can come as a blessing.

The total corporate social responsibility (CSR) spending by the top 500 companies in the country since the applicability of mandatory CSR in 2014 is likely to cross ₹60,000 crore by the end of the month as per industry reports. Even if half of these funds come through, India would have a lot of funds up its arsenal as it prepares to handle the deadly pandemic.

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Donations to the PM-CARES Fund are 100% tax deductible.

For the citizens to help, the government also announced that all donations towards the PM-CARES Fund are eligible for 100% tax deduction. Further, the limit on deduction of 10% of gross income shall also not be applicable for donations made to PM-CARES Fund.

An official statement said, "The ordinance also amended the provisions of the Income-tax Act to provide the same tax treatment to the PM-CARES Fund as available to the Prime Minister's National Relief Fund. Therefore, the donation made to the PM-CARES Fund shall be eligible for 100% deduction under section 80G of the IT Act."


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