The contribution of businesses to the PM-CARES Fund will be considered a social protection expenditure under the Companies Act, the government has declared in the framework of the ongoing efforts to deal with the situation resulting from the coronavirus epidemic .
Under company law, certain categories of profitable entities must spend at least 2% of their average annual net profit over three years for corporate social responsibility (CSR) activities in a given financial year.
“… any contribution made to the PM-CARES Fund will be considered a CSR expense,” Foreign Minister Nirmala Sitharaman said in a tweet on Sunday.
– Nirmala Sitharaman (@nsitharaman) March 29, 2020
The Ministry of Social Affairs, which applies the company law, has published a memorandum specifying that the money donated by companies to the fund would be considered a CSR expense.
The government has set up the Prime Minister’s Aid and Rescue Fund for Citizens in Emergencies (PM-CARES Fund), which would be used to deal with any emergency or distress such as followed the coronavirus outbreak.
READ ALSO: PM Narendra Modi announces PM-CARES fund to fight the coronavirus epidemic
“The PM-CARES Fund was created to assist people affected by any type of emergency or distress. Consequently, it is specified that any type of contribution to the PM-CARES Fund will be considered as an expense of Corporate CSR Act. 2013, “said the ministry in a memorandum released on Saturday.
The memorandum comes less than a week after the ministry said that spending by companies to deal with the coronavirus epidemic would be considered CSR activity under company law.
CSR funds could be used for various activities related to COVID-19, including those related to preventive health care and sanitation.
Under section 135 of the Companies Act of 2013, each company with a net worth of at least Rs 500 crore, a turnover of Rs 1000 crore or more, or a minimum net profit of Rs 5 crore during the previous financial year must make CSR expenses.
The number of coronavirus cases in the country has increased to 979 and 25 people have lost their lives so far.