The Ministry of Corporate Affairs(“MCA”), Government of India has released COVID-19 relatedFrequently Asked Questions (FAQs) on Corporate Social Responsibility (CSR) in the MCA portal on the 10th of April,2020(Reference General Circular No.15/2020) and the MCA has provided the following clarifications in this regard:

The Ministry of Corporate Affairs has clarified that a contribution made to ‘PM CARES Fund’ shall qualify as Corporate Social Responsibility (“CSR”) expenditure under Item No.(viii) of Schedule VII of the Companies Act, 2013.

Contribution made to the Chief Minister’s Relief Fund or State Relief Fund for COVID-19 is not included in Schedule VII of the Companies Act, 2013 and therefore, any contribution to such funds shall not qualify as admissible CSR expenditure.However, contribution to State Disaster Management Authority to combat COVID-19 shall qualify as CSR expenditure.

MCA has reiterated that spending CSR funds for COVID-19 related activities shall qualify as CSR expenditure.It is further clarified that funds may be spent for various activities related to COVID-19 under items nos. (i) and (xii) of Schedule VII relating to promotion of health care including preventive health care and sanitation, and disaster management.

It is however noted that since payment of salary/wages to employees and temporary/casual/daily wage workers/contract labour during the lockdown period is a moral/humanitarian and a contractual obligation of the employers and hence such payment of salary/ wages to employees or workers including imposition of other social distancing requirements shall not qualify as admissible CSR expenditure.

If any ex-gratia payment is made to temporary/casual/daily wage workers over and above the disbursement of wages, specifically for the purpose of fighting COVID – 19, the same shall be admissible towards CSR expenditure as a one-time exception subject to an explicit declaration to that effect by the Board of the Company, which is also duly certified by the statutory auditor.