Contribution by corporates to PM-CARES Fund will be considered as social welfare spending under the companies law, the government has said amid ongoing efforts to deal with the situation arising out of the coronavirus outbreak.
Under the companies law, certain classes of profitable entities have to shell out at least 2 per cent of their three-year annual average net profit towards Corporate Social Responsibility (CSR) activities in a particular fiscal.
"... any contribution made to the PM-CARES Fund shall qualify as CSR expenditure," Corporate Affairs Minister Nirmala Sitharaman said in a tweet on Sunday.
The corporate affairs ministry, which is implementing the companies law, has issued a memorandum clarifying that money donated by corporates to the fund would be considered as CSR expenditure.
The government has set up the Prime Minister's Citizen Assistance and Relief in Emergency Situations Fund (PM-CARES Fund) which would be utilised to deal with any emergency or distress situation like those in the wake of the coronavirus outbreak.
"The PM-CARES Fund has been set up to provide relief to those affected by any kind of emergency or distress situation. Accordingly, it is clarified that any kind of contribution made to the PM-CARES Fund shall qualify as CSR expenditure under the Companies Act, 2013," the ministry said in the memorandum issued on Saturday.
The memorandum comes less than a week after the ministry said that spending by corporates to deal with the coronavirus outbreak would be considered as CSR activity under the companies law.
CSR funds could be utilised for various activities related to COVID-19, including those relating to preventive healthcare and sanitation.
Under Section 135 of the Companies Act, 2013, every company having net worth of at least Rs 500 crore, turnover of Rs 1,000 crore or more, or a minimum net profit of Rs 5 crore during the immediate preceding financial year has to make CSR expenditure.
The number of coronavirus cases in the country has climbed to 979 and 25 people have lost their lives so far.
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