Under section 135 of Companies Act, 2013 any company with a net worth of at least Rs 500 crore, or a turnover of Rs 1,000 crore or more, and/or a net profit of Rs 5 crore or more in the immediately preceding financial year, is mandated to spend 2% of the average net profit of the company in the three immediately preceding financial years as CSR.
The ministry of corporate affairs (MCA) said in a circular on wednesday clearified that corporate's funds spent on creating facility for Covid-19 care, such as establishment of medical oxygen generation and storage plants, would count as Corporate Social Responsibility (CSR) expenditure.
MCA said in a circular, “The companies including government companies may undertake the activities or projects or programmes using CSR funds, directly by themselves or in collaboration as shared responsibility with other companies, subject to fulfilment of Companies (CSR Policy) Rules, 2014.”
This recent development may encourage corporates to manufacture oxygen concentrators, ventilators and cylinders in the country. This move comes in the backdrop of a severe shortage of medical oxygen and related equipment across India.
In a previous circular in April 2021, the MCA had clarified that setting up of Covid care facilities and makeshift hospitals would also count as CSR spends.
In March 2020 to deal with the Covid-19 pandemic and any other such emergencies contribution to the PM Cares Fund was also declared as an eligible activity under Corporate Social Responsibility of companies.
In FY20, a total of 1,075 companies, including private and public organisation, spent Rs 7,823 crore on CSR activities, while in FY19, a total of 24,392 companies spent around Rs 18,655 crore on CSR. Of the total annual CSR spend, around 60% of the expenditure has been done through various implementing agencies.
The Copy of notification is as under: