In a bid to contain the second and more virulent wave of Covid, the government is now reaching out to the private sector for more assistance. On these lines, the ministry of corporate affairs (MCA) has further expanded the provisions related with CSR activity to include more Covid-related expenditure by the companies.
In March last year, the MCA mandated that spending of CSR funds for various Covid-related measures is an eligible CSR activity. It has further clarified that spending of these funds for “creating health infrastructure for Covid care, establishment of medical oxygen generation and storage plants, manufacturing and supply of oxygen concentrators, ventilators, cylinders and other medical equipment for countering Covid” or similar such activities are eligible CSR activities. Drawing the attention of companies towards initiatives being taken by the DRDO and CISR for setting up temporary Covid care facilities and makeshift hospitals, the MCA said spending on “setting up Covid care facilities and makeshift hospitals is an eligible CSR activity.
“Further in view of the ongoing work-from-home mode, you may have some vacant buildings at your disposal. You may like to consider converting these vacant office buildings to temporary Covid care facilities with either isolation beds or a combination of isolation and oxygen beds to cater to rapidly increasing Covid caseload in many parts of the country,” it added.
The ministry also emphasised said the Companies Act, 2013 allows contribution to specified research and development projects as well as contribution to public funded universities and certain organisations engaged in conducting research in science, technology, engineering and medicine as eligible CSR activities.
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.
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.