New Delhi: The government has amended the norms whereby contributions by corporates to the PM CARES Fund will qualify as CSR spending under the companies law.
Under the Companies Act, 2013, a certain class of profitable entities are required to shell out at least two percent of their three-year annual average net profit towards Corporate Social Responsibility (CSR) activities in a particular fiscal.
In March, the corporate affairs ministry said contributions by companies to the PM-CARES Fund would be considered as CSR spending. The decision by the ministry, which is implementing the Act, came amid the coronavirus pandemic.
Corp Affairs Min notifies inclusion of PM-CARES Fund as part of CSR spend.
MCA includes PM-CARES Fund in Schedule VII of the Companies Act, 2013 along with ‘PM’s Natl Relief Fund’.
Inclusion of PM-CARES Fund as part of CSR spend to be effective March 28, 2020 pic.twitter.com/8nbmZQCH7m
— CNBC-TV18 (@CNBCTV18Live) May 27, 2020
Now, the ministry has made changes in Schedule VII of the Act to provide for the provision. Schedule VII pertains to CSR activities.
“In Schedule VII, item (viii), after the words “Prime Minister’s National Relief Fund” the words “or Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund)” shall be inserted,” the ministry said in a notification issued on Tuesday.
The notification would be deemed to have come into force on 28 March, it added.
The PM CARES Fund would be utilised to deal with any emergency or distress situation such as coronavirus outbreak.
Under Section 135 of the Companies Act, 2013, every company having a 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 immediately preceding financial year, has to make CSR expenditure.