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04 Sep2020
  • By Admin
  • Category Company and LLP Compliances
  • Views 283
Corporate Social Responsibility (CSR) is an initiative by the GOI, to assure that the companies ethically carry their business and are cognizant of the impact of their business on the rest of the society including their own stakeholders and the environment. It is implemented in accordance with the Companies Act, 2013. It demands all eligible companies, i.e. companies having -
  1. The net worth of at least Rs. 500 crores or more, or 
  2. Turnover of at least Rs. 1,000 crores or more, or
  3. Net profit of Rs. 5 crores 
during the immediately preceding financial year to contribute 2% of the average net profits of the company made during the 3 immediately preceding fiscal years following the company CSR policy

The Ministry of Corporate Affairs has clarified certain activities in Schedule VII of the Companies Act, 2013, which can be incorporated by the companies in their CSR activities like promoting free education, eradicating poverty, providing hygiene kits etc.

Amidst the outbreak of the widespread COVID 19 pandemic, its declaration as a pandemic by the World Health Organisation (WHO) and continuation of the lock-down owing to its contagious nature, the GOI has set up the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund’ (PM CARES Fund) with the primary objective of dealing with any emergency or distress situation such as that posed by COVID- 19 epidemic. The government further stated that any such contribution made to PM CARES Fund should also form part of CSR expenditure as enumerated in the Companies Act, 2013.
Further, the GOI by General Circular No. 15 /2020 dated April 10, 2020, has clarified various points regarding which donations made for COVID 19 shall qualify as the CSR expenditures by way of FAQs. 

Even though contribution made to ‘PM CARES Fund’ and ‘State Disaster Management Authority’ qualify as CSR expenditures, corporates must intend to make real difference step up in this need of the hour by not only making monetary contributions to various funds of the government but also assisting in more direct ways like donating directly or through NGOs for providing essential food, masks, sanitisers, testing kits, arranging mental wellness sessions for employees, developing software for governments to implement various schemes etc.

In conclusion, Corporate Social Responsibility (CSR) is a crucial initiative implemented by the Government of India to ensure ethical business practices and social impact. Companies are required to contribute a portion of their profits to CSR activities. The inclusion of COVID-19 related donations in CSR expenditure highlights the importance of addressing urgent societal needs. While monetary contributions are valuable, companies should also consider direct involvement in providing essential resources and support during times of crisis. By actively participating in CSR activities, companies can make a tangible difference and contribute to the well-being of society.

"Make a difference in society by embracing Corporate Social Responsibility (CSR) - contribute to the PM CARES Fund, support NGOs, and engage in impactful initiatives to address the pressing needs of our community." To connect with us, Mail at info@manishanilgupta.com

Disclaimer: The information provided in this blog is for general purposes only and should not be considered as professional advice.

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