Anshu Gupta (CA-Final)
Background
As Per Section 135 of the Companies Act, 2013 ("CSR provisions"), every company with net worth of INR 500 crore or turnover of INR 1000 crore or more or net profit of 5 crore or more is mandated to spend 2% of average net profit of the preceding three years on corporate social responsibilities (CSR) activities. The list of CSR activities enumerated under Schedule VII of the Companies Act have been amended by the government from time to time.
Contribution to PM Cares Fund
Ministry vide Office Memorandum F. No. CSR-05/1/2020-CSR-MCA dated 28th March, 2020 has clarified that contribution made to "PM Care Fund" shall qualify as CSR Expenditure under item no. (viii) of Schedule VII of the Companies Act, 2013. The ministry has also issued several FAQs on CSR vide General Circular no. 15/ 2020 dated 10th April, 2020 on the request of various stakeholders seeking clarification on eligibility of CSR Expenditure related to COVID19 Activities.
The Government of India has set up the Prime Minister's Citizen Assistance and Relief in Emergency Situations Fund' (PM CARES Fund) with the objective of dealing with any kind of expenditure incurred w.r.t emergency or distress situation such as that posed by COVID 19 pandemic.
Amendment to Schedule VII of Companies Act, 2013
The Ministry of Corporate Affairs (MCA) has amended the item no (viii) of Schedule VII of the Companies Act, 2013 vide Notification no. CG-DL-E-26052020-219562 dated 26th May 2020 wherein " PM CARES Fund has been inserted with PMNRF Fund ". It may now be included by companies in their Corporate Social Responsibility Policies Activities.
The Notification can be read as follows:-
G.S.R.313(E) - In exercise of the powers conferred by sub-section (1) of section 467 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following further amendment to Schedule VII of the said Act, namely:
1. 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.
2. This notification shall be deemed to have come into force on 28th March, 2020.
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