Business Today
Loading...

PM CARES now eligible to receive contribution under CSR; govt amends Act

The Ministry of Corporate Affairs (MCA) has allowed the CSR contributions by making changes to the Companies Act via notification dated May 26

twitter-logoRahul Shrivastava New Delhi Last Updated: June 11, 2020 | 10:18 IST
PM CARES now eligible to receive contribution under CSR; govt amends Act
The move is expected to add fuel to the ongoing controversy over the PM CARES Fund

The government has made the PM CARES Fund eligible to receive contributions from corporate social responsibility (CSR) corpuses of corporates. The Ministry of Corporate Affairs (MCA) has allowed the CSR contributions by making changes to the Companies Act via notification dated May 26. "In Schedule VII, item (viii), after the words "Prime Minister's National Relief Fund", the words "or Prime Minister's Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund)" shall be inserted," MCA said. The new gazette notification will come into effect from March 28, 2020.

"The battle against COVID 19 needs a large amount of money. If corporates can contribute to the PM CARES fund the corpus would allow assistance to immediate needs like helping the migrants," a senior minister in the central government said while reacting to the notification.

However, the move is expected to add fuel to the ongoing controversy over the PM CARES Fund. Prime Minister Narendra Modi has faced criticism for not using the existing PM Relief Fund during the coronavirus crisis and instead establishing the new PM CARES Fund. Several businesses and celebrities had rushed in to pledge millions in new donations over the past few weeks.

The opposition and the NGO sector is also not welcoming of the move. The corporates would start diverting  their CSR funds to PM CARES Fund as it's a high profile entity, they said. The NGOs dependent on the CSR funds for public service activities may not get adequate assistance in the year ahead, they also said.

A senior Congress leader said, "CSR funds could be donated to the PM RELIEF Fund as per old existing rules. This is yet another way to weaken the old fund and empower what Mr Modi created."

"A lot of small non profit organisations are doing great public service at the grass roots. They know the needs of the people the best. These organisations were getting their funds from the CSR provisions. With the new permission corporates would opt for dovetailing their funds into the PM CARES. This means drying up of resources at the bottom of the pyramid and the central Govt driven fund getting cash rich. It has been witnessed that the centre's capability in targeting stressed areas lacks awareness of ground realities," he added.

The PM CARES Fund was created by PM Modi on March 28 to enable citizens to contribute to government's containment and relief efforts against the coronavirus outbreak. The MCA had allowed contributions to the PM CARES Fund on March 28 as CSR expenditure. The government had also clarified that that contributions to Chief Minister's Relief Fund and State Relief Fund for coronavirus can't be claimed as CSR spending by companies

The companies with a net profit of Rs 5 crore or a net worth of Rs 500 crore or a turnover of Rs 1,000 crore currently have to spend 2 per cent of their average net profits of the last three years as CSR. The funds for CSR could be utilised for programmes such as eradication of extreme hunger and poverty, promotion of education, improving maternal health, among others.

Also read: Coronavirus crisis: Nokia closes Tamil Nadu plant after 42 employees test positive

Also read: Worst locusts attack in decades; crops damaged in Maharashtra, Madhya Pradesh, UP, Rajasthan

Youtube
  • Print

  • COMMENT
BT-Story-Page-B.gif
A    A   A
close