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3 minutes read

Not Just Donation, These 10 Covid-19 Expenses Can Be Treated As CSR Activities

| Published on April 3, 2020

This question must have arrived in your mind, and many of us have answered it in our minds- these companies earn more so as a goodwill gesture they donate more.
Well, no doubt these companies want to do good, but there is a secret behind the huge amount of donation. And that is CSR (Corporate Social Responsibility).

What is CSR?

The corporate social responsibility rules make it mandatory for large Indian firms to set aside at least 2% of their average net profit for socially responsible expenditures. The norms are applicable to firms with at least ₹5 crores net profit of ₹1,000 crore turnover or ₹500 crore net worth. The government decides the list of activities included under CSR.

According to India Briefing, 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. Businesses can invest their profits in areas such as education, poverty, gender equality, and hunger as part of any CSR compliance.

List of new activities included under CSR in wake of fighting COVID-19

The Ministry of Corporate Affairs announced that donations made by companies to the PM CARES Fund would be considered as expenditure on corporate social responsibility.

A circular by the Ministry of Corporate Affairs said, “The PM CARES Fund has been set up to provide relief to those affected by any emergency or distress situation. Accordingly, it is clarified that any contribution made to the PM CARES Fund shall qualify as CSR expenditure under the Companies Act 2013.

However, there are a lot of other ways that a company can use its CSR funds to help the country fight COVID-19. Activities related to COVID-19 like promotion of healthcare, preventive healthcare, sanitation, disaster management would qualify for treatment as CSR, as per a circular by the ministry.

Here is what else qualifies as CSR funds, if utilised for COVID-19 related activities:

1. Scientific research for the development of drugs for COVID-19.

2. Manufacture and/or distribution of kits for testing the disease.

3. Providing quarantine facilities to those affected.

4. Mass training of nurses and paramedical staff.

5. Distribution of food and arrangement of shelter for doctors and paramedical staff.

6. Opening of sanitation facilities (mobile and stationary) and training of workers for the same.

7. Distribution of food/medicine/financial support to the poor/daily wage earners who are forced to stay at home during the lockdown/curfew.

8. Arrangement of ambulance and corpse carriers (if required)

9. Mass supply of protective gear (gloves, caps, masks etc.)

10. Transport facilities for medical and paramedical staff and other supporting staff.

You Should Know

The total corporate social responsibility (CSR) spending by the top 500 companies in the country since the applicability of mandatory CSR in 2014 is likely to cross ₹60,000 crores by the end of the month as per industry reports. Even if half of these funds come through, India would have a lot of funds up in its arsenal as it prepares to handle the deadly pandemic.

I hope now you have understood the reason why big firms are donating hundreds of crores, producing masks, ventilators, hand-sanitizer and other medical supplies, offering hospitals and doing much more.


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