Covid awareness campaigns are activities eligible to be considered CSR: MCA
Businesses can use their corporate social responsibility (CSR) funds to create awareness about covid-19 but cannot use such funds exclusively on activities that benefit employees and family, the government has said in a clarification.Spending CSR funds for carrying out “awareness campaigns/programmes or public outreach campaigns on covid-19 vaccination programme is an eligible CSR activity" under provisions of the law, the ministry of corporate affairs has said in a communication to its field officials and to the public.Also Read Digital bank account sparks off a disruptionSuch spending will be considered under the Companies Act provisions allowing CSR expenditure towards promotion of healthcare including preventive healthcare and sanitation, promoting education and disaster management, the communication said.However, these activities have to be undertaken as per the Companies (CSR policy) Rules of 2014 and related orders, the ministry said. These rules do not recognize activities that benefit only employees and their family members as CSR activities. This prevents businesses from using their CSR funds for vaccination of employees and family. Employee cost is an expenditure that is taken into account while arriving at the net profit of the company, a small part of which is mandated to be spent on CSR activities.Companies with net worth of Rs500 crore or more, or a turnover of Rs1,000 crore or more, or net profit of Rs5 crore or more, are required to spend 2% of their average net profit of the preceding three years on CSR activities.The ministry revised CSR rules last year to align these with the requirements of fighting the pandemic, including by allowing life sciences companies to spend their CSR funds for finding therapies for covid-19. A restriction on life sciences companies spending CSR funds in activities which are part of their normal course of business was lifted last August. Also, donations to the Prime Minister’s emergency fund set up to fight back the pandemic was made eligible for CSR spending. However, in the case of contribution to state agencies, only donations to State Disaster Management Authority qualifies as CSR spending, not contributions to chief minister’s relief find.Indian businesses spend roughly Rs15,000 crore a year on CSR as per pre-pandemic official estimates. This could come down in the short term given the stress businesses are facing during the recession.