Corporate Social Responsibility: Issues & Development

Covid-19 donations to CM Relief Fund won’t qualify as CSR


From UPSC perspective, the following things are important :

Prelims level : CSR and its regulation

Mains level : CSR/SSR activities and their impacts on social transformation

The corporate affairs ministry has clarified that COVID-19 donations to CM Relief Fund won’t qualify as CSR contributions.

Contributions considered under CSR

  • According to the ministry, contributions made to the State Disaster Management Authority to combat COVID-19 would qualify as CSR expenditure.
  • The contributions by companies to PM-CARES Fund to tackle the pandemic would be considered as CSR.
  • Ex-gratia payments made to temporary, casual and daily wage workers by companies will be considered as CSR expenditure under the company’s law, provided that such payments are over and above disbursement of wages.
  • The contribution towards ‘Chief Minister’s Relief Fund’ or ‘State Relief Fund for COVID-19’ would not be considered as spending towards CSR work.

Note: Please remember or make note of the various contributions complying for CSR.

Back2Basics: CSR in India

  • India is the first country in the world to make corporate social responsibility (CSR) mandatory, following an amendment to the Companies Act, 2013 in April 2014.
  • Prior to that, the CSR clause was voluntary for companies, though it was mandatory to disclose their CSR spending to shareholders.
  • Businesses can invest their profits in areas such as education, poverty, gender equality, and hunger as part of any CSR compliance.
  • Under the Companies Act, 2013, certain classes of profitable entities are required to spent at least 2 per cent of their three-year average annual net profit towards CSR activities.
  • Under Section 135 of the Companies Act, 2013, every company having net worth of at least ₹500 crore, turnover of ₹1,000 crore or more, or a minimum net profit of ₹5 crore during the immediately preceding financial year, has to make CSR expenditure.

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