What is CSR?
Under section 135(5) of the companies act, a company has to mandatorily fulfil their corporate social responsibility, provided they qualify certain criteria. A company needs to abide by the CSR requirements if, during the immediately preceding financial year it is
- Having a net worth over equal to or more than 500 cr
- Turnover of Rs 1000 cr or more
- Net profit of INR 5 cr or more.
The act also mentions that the company should spend at least 2% of the average net profits on CSR. Under Section 80G of the Income Tax Act, 1961 – 100% deduction to the company in gross total income, provided they have contributed to PM care fund or CM care fund.
What changed in CSR During COVID times
Before we detail about what has changed let us talk about the significant expenses by a company that are covered under CSR.
- Under CSR a company can provide education
- Take up and complete projects related to rural development.
- Contribution to PM cares fund
- Project or contribution towards protecting the environment.
- Relief and contribution related to disaster management.
- Promoting and working towards gender equality
- Contribution towards and promotion of healthcare
Ever since COVID-19 has taken the shape pf global pandemic, the act also encompasses the activities related to COVID-19. The preventive healthcare and sanitation drive and projects under COVID -19 are also a part of CSR now.
Fund Spent Under CSR related to COVID -19
There are multiple avenues under which a company can spend funds related to COVID-19.
- Contribution towards eradication of hunger and malnutrition
- Eradication of poverty
- Contribution towards promotion of health care and preventive healthcare
- Funds and efforts directed towards the contribution of Swacch Bharat Kosh
- Contribution towards the disaster management and reconstruction activities.
Another general circular stated that all the items in schedule VII can also be interpreted liberally for the purpose of contributions made to COVID 19.
Exclusive COVID related CSR
Apart from the tax exemptions under already existing CSR structure, the Government of India in order to encourage the companies also brought the following under CSR.
1. Research and development of the drugs for COVID-19
2. Manufacturing and distribution of testing kits
3. Offering quarantine facilities to the COVID patients
4. Providing shelter and food for the doctors and paramedical
5. Conducting training for nurses and other medical staff
6. Setting up either mobile or stationary sanitisation facilities
7. Contribution towards the arrangement of corpse carrier and ambulance
8. Distribution of medical supplies/ food and other necessary items to the daily wage earners
9. Arranging the transportation facility for medical/paramedical staff
As a result of COVID-19 related donation and contributions added to the CSR, there have been contributions from across the industry. Here is a broader look at the percentage contributions by the different industries towards PM care fund.
- Government agencies – Approx 4,308.3 cr
- Private companies, industry bodies, social organizations (including salaries) – close to 5300 cr