The central government has decided to allow India Inc to use their mandatory corporate social responsibility (CSR) spending on measures to fight COVID-19. The Finance Minister Nirmala Sitharaman on Monday confirmed that spending of CSR funds for COVID-19 is eligible CSR activity.
"In view of the spread of novel coronavirus in India, its declaration as pandemic by the WHO, and decision of Government of India to treat this as notified disaster, it is hereby clarified that spending of CSR funds for COVID-19 is eligible CSR activity," Sitharaman said on Twitter.
"Keeping in view of the spread of novel Corona Virus (COVID-19) in India, its declaration as pandemic by the World Health Organisaton (WHO), and decision of 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," Ministry of Corporate Affairs notified on Monday.
"Funds may be spent for various activities related to COVID-19 relating to promotion of healthcare, including preventive health care and sanitation and disaster management," it said.
According to the Companies Act, firms with a net worth of Rs 500 crore, or turnover of Rs 1,000 crore or net profit of Rs 5 crore or more, are required to set aside 2 per cent of their average net profits over the last three years on corporate social responsibility activities.
The rules governing the CSR spending norms have been amended to pave the way for greater investment into activities related to COVID-19, such as promotion of health care. This will include preventive health care and sanitisation, and disaster management, as per the proposal approved by the finance ministry.
In wake of rising cases of coronavirus cases in India, many state governments have announced lockdowns of various cities to contain the outbreak of the pandemic. This has severely affected the operations of the companies and is likely to impact their profitability.
India has reported as many as 415 confirmed cases of novel coronavirus. Globally, more than 3.35 lakh confirmed cases of COVID-19 has been reported, while 14,600 people have died so far due to this disease.
By Chitranjan Kumar