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PM Cares Fund under CSR Activity

Broadening the scope of CSR - Inclusion of 'PM Cares Fund' as CSR activity


The fundamental concept behind ‘Corporate Social Responsibility’ (hereinafter referred to as “CSR”) is to make contribution towards growth and development of the society. Because as the society prospers, so will the opportunities for businesses.  


Corporates are known to utilise resources and skills of the society in order to generate upscale profits. Thus, it becomes responsibility of these corporates to compensate in lieu of resources they are consuming for enriching their wealth. The time to return back to the roots.  


Thus, those companies were mandatorily required to make a contribution of 2% of average net profit of preceding three years towards CSR activities whose, in any financial year[1],

  • Net worth equals or greater than INR 500 Crore or more; or 
  • Turnover equals or greater than INR 1000 Crores or more; or
  • Net profit equals or greater than INR 5 Crore;                                                                          


CSR contribution to be made for any activities resulting into 

  • Eradication of hunger and poverty;
  • Promotion of education;
  •  Promotion of gender equality and empowerment of woman;
  •  Reduction of child mortality;
  • Improvement in maternal health;
  • Eradication of human immunodeficiency virus, acquired immune deficiency syndrome, malaria and other diseases;
  •  Environmental sustainability;
  • Enhancement of vocational skills, social business projects;
  • Contribution to PM’s National Relief Fund or any other fund set by CG or SG for socio-economic development;
  • Relief and funds for the welfare of scheduled castes, scheduled tribes, other backward classes, minorities and woman and other matters as may be prescribed.


The concept of CSR is in the news recently because of the amendment made to the provisions relating to CSR. Prime Minister’s Office (PMO), the Ministry of Corporate Affairs swiftly issued a general circular[2] wherein, Sub-section (1) to Section 467 of the Companies Act, 2013 amended to include the words ‘Prime Minister's Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund)’ after the words 'Prime Minister's National Relief Fund' in item (viii) of the Schedule VII[3].


Thus, the scope of activities for CSR contribution has been widened to now include ‘PM Cares Fund’ as well. Earlier, only ‘PM’s National Relief Fund’ was included in the activities for CSR Contribution. 


This amendment has a retrospective effect and deem have come into effect on 28th March 2020.         


The donations made by big corporates earlier towards ‘PM cares’ can now be considered a contribution towards Corporate Social Responsibility (CSR). Also, the contribution is 100% exempted from taxes.[4] Thus, gives ample scope for corporates to avail double benefit of tax exemption under Income Tax Act, 1961 as well as the benefit of CSR compliance.


Non-profit organizations that are involved in societal empowerment and public service, which are solely dependent upon ‘CSR Contribution’, may get a setback this time as almost all the corporates are making contribution towards ‘PM Cares’ and would definitively choose to become a beneficiary of the amendment, considering the double benefit it can offer. However, the amount of contribution made by company should be made public. 


[1] Section 135, Companies Act, 2013

[2] http://www.mca.gov.in/Ministry/pdf/Covid_23032020.pdf

[3] SCHEDULE VII (See Section 135)

Activities which may be included by companies in their Corporate Social Responsibility Policies Activities relating to:—

(i) Eradicating hunger, poverty and malnutrition, promoting health care including preventinve health care and sanitation including contribution to the Swach Bharat Kosh set-up by the Central Government for the promotion of sanitation and making available safe drinking water. 

(ii) promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly and the differently abled and livelihood enhancement projects.

(iii) promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centres and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups.

(iv) ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintaining quality of soil, air and water including contribution to the Clean Ganga Fund set-up by the Central Government for rejuvenation of river Ganga.

(v) protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art; setting up public libraries; promotion and development of traditional art and handicrafts; 

(vi) measures for the benefit of armed forces veterans, war widows and their dependents;

(vii) training to promote rural sports, nationally recognised sports, paralympic sports and Olympic sports

(viii) contribution to the Prime Minister's National Relief Fund or any other fund set up by the Central Government for socio-economic development and relief and welfare of the Scheduled Caste, the Scheduled Tribes, other backward classes, minorities and women;

(ix) Contribution to incubators funded by Central Government or State Government or any agency or Public Sector Undertaking of Central Government or State Government, and contributions to public funded Universities, Indian Institute of Technology (IITs), National Laboratories and Autonomous Bodies (established under the auspices of Indian Council of Agricultural Research (ICAR), Indian Council of Medical Research (ICMR), Council of Scientific and Industrial Research (CSIR), Department of Atomic Energy (DAE), Defence Research and Development Organisation (DRDO), Department of Science and Technology (DST), Ministry of Electronics and Information Technology) engaged in conducting research in science, technology, engineering and medicine aimed at promoting Sustainable Development Goals (SDGs).

(x) rural development projects

(xi) slum area development.

Explanation.- For the purposes of this item, the term `slum area' shall mean any area declared as such by the Central Government or any State Government or any other competent authority under any law for the time being in force.

(xii) disaster management, including relief, rehabilitation and reconstruction activities.

[4] Amendment to Section 80G, Income Tax Act by Taxation and other Laws (Relaxation of Certain Provisions) Ordinance, 2020, https://www.taxcorner.co.in/2020/04/govt-notifies-taxation-and-other-laws-relaxation-of-certain-provisions-ordinance-2020.html

 

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