CONTRIBUTION TO PM CARES FUND vs CORPORATE SOCIAL RESPONSIBILITY (CSR)

An APPEAL for Contribution:

MCA has issued its Circular on 29.03.2020 vide ReF. No. CSR-05/1/2020-CSR-MCA wherein clarification on eligibility of contribution to PM CARES Fund for CSR activity under item no. (viii) of the Schedule VII of Companies Act, 2013 was given.

On 22nd March, 2020 (Sunday), finance minister Mrs. Nirmala Sitharaman while addressing the social media announced that the ministry of corporate affairs (MCA) had notified that CSR funds can donate to the PM CARES Fund.

Item no. (viii) of the Schedule VII of the Companies Act, 2013, which enumerates activities that may be undertaken by companies in discharge of their CSR obligations, inter alia provides that contribution to any fund set up by the Central Government for socio-economic development and relief qualifies as CSR expenditure.

[Item No. viii. Contribution to the prime minister’s national relief fund or any other fund set up by the central govt. for socio economic development and relief and welfare of the schedule caste, tribes, other backward classes, minorities and women]

The PM-CARES Fund has been set up to provide relief to those affected by any kind of emergency or distress situation. Accordingly, it is clarified that any contribution made to the PM CARES Fund shall qualify as CSR expenditure under the Companies Act 2013.

The aforesaid clarification wad issued with the approval of competent authority and signed by Mr. Gyaneshwar Kumar Singh, Joint Secretary to Govt of India

Appeal from PM Narendra Modi:

The emergency fund was created by Prime Minister Narendra Modi on Saturday after his office received numerous requests from people for donations to support the government in its fight against the impact of Covid-19. "People from all walks of life expressed their desire to donate to India's war against COVID-19," Modi said, adding the fund has been constituted respecting that spirit.

Appealing to citizens to donate generously, PM Modi said, “It is my appeal to my fellow Indians, kindly contribute to the PM-CARES Fund. This Fund will also cater to similar distressing situations, if they occur in the times ahead.”

People can visit www.pmindia.gov.in to make contributions using credit and debit cards, UPI, net banking and RTGS or NEFT.

From the post by Mr. Chitranjan Kumar on Business Today, dated 23^rd March, 2020 wherein it was posted as:

The central government has decided to allow India Inc to use their mandatory corporate social responsibility (CSR) spending on measures to fight COVID-19. The Finance Minister Nirmala Sitharaman on Monday confirmed that spending of CSR funds for COVID-19 is eligible CSR activity.

"In view of the spread of novel coronavirus in India, its declaration as pandemic by the WHO, and decision of Government of India to treat this as notified disaster, it is hereby clarified that spending of CSR funds for COVID-19 is eligible CSR activity," Sitharaman said on Twitter.

"Keeping in view of the spread of novel Corona Virus (COVID-19) in India, its declaration as pandemic by the World Health Organisaton (WHO), and decision of Government of India to treat this as a notified disaster. It is hereby clarified that spending of CSR funds for COVID-19 is eligible CSR activity," Ministry of Corporate Affairs notified on Monday.

"Funds may be spent for various activities related to COVID-19 relating to promotion of healthcare, including preventive health care and sanitation and disaster management," it said.

According to the Companies Act, firms with a net worth of Rs 500 crore, or turnover of Rs 1,000 crore or net profit of Rs 5 crore or more, are required to set aside 2 per cent of their average net profits over the last three years on corporate social responsibility activities.

The rules governing the CSR spending norms have been amended to pave the way for greater investment into activities related to COVID-19, such as promotion of health care. This will include preventive health care and sanitisation, and disaster management, as per the proposal approved by the finance ministry.

In wake of rising cases of coronavirus cases in India, many state governments have announced lockdowns of various cities to contain the outbreak of the pandemic. This has severely affected the operations of the companies and is likely to impact their profitability.

India has reported as many as 415 confirmed cases of novel coronavirus. Globally, more than 3.35 lakh confirmed cases of COVID-19 has been reported, while 14,600 people have died so far due to this disease.

PRIMARY OBJECTIVE OF PM CARES FUND:

To deal with any kind of emergency or distress situation such as that posed by COVID 19 pandemic.

The Government of India has set up the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund’ (PM CARES Fund).

Click here to know more about Provision of Provisions Of Corporate Social Responsibility (CSR) under Section 135 of Companies Act, 2013

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PROVISIONS OF CORPORATE SOCIAL RESPONSIBILITY (CSR): SECTION 135

(A) Definition:

Corporate Social Responsibility (CSR)” means and includes but is not limited to:

(i)      Projects or programs relating to activities, areas or subjects specified in Schedule VII (Annexure A) to the Act or

(ii)     Projects or programs relating to activities undertaken by the board of directors of a company in pursuance of recommendations of the CSR Committee of the Board as per declared CSR Policy of the company subject to the condition that such policy will cover subjects enumerated in Schedule Vll (Annexure A) of the Act.

(B) Constitution of CSR Committee of the Board / Applicability:

 (1) Every company having:

·         net worth of rupees five hundred crore or more, or

·         turnover of rupees one thousand crore or more or

·         a net profit of rupees five crore or more

during the immediately preceding financial year 

(C) Composition of Corporate Social Responsibility Committee:

·         Three or more directors, out of which at least one director shall be an independent director or

·         two or more directors, where a company is not required to appoint an independent director under sub-section (4) of section 149,

(D) Role of the Corporate Social Responsibility Committee:

The Corporate Social Responsibility Committee shall

a)     formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the company in areas or subject, specified in  Schedule VII;

(b) recommend the amount of expenditure to be incurred on the activities referred to in clause (a); and

(c) monitor the Corporate Social Responsibility Policy of the company from time to time.

(E) Role of the Board:

The Board of every company referred to in sub-section (1) shall-

(a) after taking into account the recommendations made by the Corporate Social Responsibility Committee, approve the Corporate Social Responsibility Policy for the company and disclose contents of such Policy in its report and also place it on the company's website, if any, in such manner as may be prescribed; and

(b) ensure that the activities as are included in Corporate Social Responsibility Policy of the company are undertaken by the company.

(F) Expenditure by the Company as CSR during the year:

The Board of every company referred to in sub-section (1), shall ensure that the company spends, in every financial year, at least two per cent. of the average net profits of the company made during the three immediately preceding financial years or where the company has not completed the period of three financial years since its incorporation, during such immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy:

Provided that the company shall give preference to the local area and areas around it where it operates, for spending the amount earmarked for Corporate Social Responsibility activities:

(G) Disclosure in the Board report of the Company:

As per the section 134(3), the composition of the Corporate Social Responsibility Committee shall be disclosed in the Board's Report.

(H) Action required for NIL Expenditure by the Company as CSR during the year:

If the company fails to spend such amount, the Board shall, in its report made under clause (o) of sub-section (3) of section 134, specify the reasons for not spending the amount and, unless the unspent amount relates to any ongoing project referred to in sub-section (6), transfer such unspent amount to a Fund specified in Schedule VII, within a period of six months of the expiry of the financial year.

Explanation.—For the purposes of this section "net profit" shall not include such sums as may be prescribed, and shall be calculated in accordance with the provisions of  section 198.]

(I) Transfer of remaining unspent  to Unspent Corporate Social Responsibility Account:

Any amount remaining unspent under sub-section (5), pursuant to any ongoing project, fulfilling such conditions as may be prescribed, undertaken by a company in persuance of its Corporate Social Responsibility Policy, shall be transferred by the company within a period of thirty days from the end of the financial year to a special account to be opened by the company in that behalf for that financial year in any scheduled bank to be called the Unspent Corporate Social Responsibility Account, and such amount shall be spent by the company in pursuance of its obligation towards the Corporate Social Responsibility Policy within a period of three financial years from the date of such transfer, failing which, the company shall transfer the same to a Fund specified in Schedule VII, within a period of thirty days from the date of completion of the third financial year.

(J) Provisions related to Non Compliance in spending CSR amount:

  

If a company contravenes the provisions of sub-section (5) or sub-section (6), the company shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to twenty-five lakh rupees and every officer of such company who is in default shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or with both.

The Central Government may give such general or special directions to a company or class of companies as it considers necessary to ensure compliance of provisions of this section and such company or class of companies shall comply with such directions. [Section 135(8)]

(K) Non-Applicability of Corporate Social Responsibility (CSR) provisions:

Every company which ceases to be a company covered under this section of the Act for three consecutive financial years shall not be required to comply with the provisions of the Act, till the Company again falls in the eligibility criteria of CSR

(L) Schedule VII- Annexure A– Explaining Activities which will be considered as Corporate Social Responsibility Activities:

Annexure A

i. Eradicating hunger, poverty and malnutrition, promoting health care including preventive health care and sanitation including contribution to the Swachh 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 & orphans, setting up old age homes, day care centres & such other facilities for senior citizens & 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 dependants;

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 govt. for socio economic development and relief and welfare of the schedule caste, 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;

xii. Disaster Management, including relief, rehabilitation and reconstruction activities;

DISCLAIMER: The Entire Contents of this document have been prepared on the basis of relevant provisions and information available at that time and prepared with due accuracy and reliability. But in no event, I will be liable for any damages caused in connection with the use of this information.

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43 Key Highlights of FM Mrs. Nirmala Sitharaman press conference dated 26.03.2020

43 Key Highlights of FM Mrs. Nirmala Sitharaman press conference dated 26.03.2020

1.     Government to contribute 12% from the employee and employer side to the PF, for firms having less than 100 employees.

Government will contribute 12% from the employer side and 12% from the employee side to PF accounts. This for those firms where there are less than 100 employees, 90% of who draw less than 15,000 per month in wages.

2.     EPFO schemes regulation will be amended to allow the non-refundable advance of 75% of the standing amount

Due to Covid-19 pandemic, EPFO schemes regulation will be amended to allow the non-refundable advance of 75% of the standing  amount or three month wages, whicever is lower. This will benefit 4.8 crore workers.

3.     Government will pay the EPF contribution

The government will pay the EPF contribution, both of the employer and employee, ie. 24% for the next three months. This is for all those establishments which have upto 100 employees, out of which 90% employees draw less than Rs 15,000 per month

4.     Ujjwala Yojna beneficiaries to get gas cylinders free for next three months

In the PM Garib Kalyan Yojna the Finance Minister announced that Ujjwala beneficiaries will get fre gas cylinders for thee months.

5.     FM doubles collateral-free loans to Rs 20 lakh for Self Help Group women

Collateral free loans doubled to Rs 20 lakhs for Self Help Group women, to help 7 crore women. 

6.     No one will remain hungry'; government brings in food, cash relief amid coronavirus

Finance Minister Nirmala Sitharaman has come up with a Rs 1,70,000 crore relief package for the daily wage earners, women workers and migrant workers as the country remains in a 21-day lockdown period due to coronavirus outbreak.

7.     8.3 crore BPL family will get free LPG cylinders

To provide an adequate supply of cooking gas, for the next three months 8.3 crore BPL family will get free cylinders.

8.     Woman Jan Dhan account holders will get an ex-gratia amount of Rs 500 per month

20 crore woman Jan Dhan account holders will get an ex-gratia amount of Rs 500 per month for the next three months, to fight coronavirus.

9.     Senior citizens, widows, and Divyangs to get one-time additional payment of Rs 1000

Senior citizens, widows, and Divyangs to get one-time additional payment of Rs 1000 in two installments for the next three months. This is expected to benefit 3 crore such people under Direct Benefit Transfer.

10.  FM Sitharaman's package to help directly affected, migrants workers, urban and rural poor.

"We have come with a package that will immediately help those affected directly, those migrants workers, urban and rural poor. We are looking both at cash transfers as well as food security measures," Sitharaman said.

11.  FM announces immediate transfer of Rs 2000 to farmers

FM announces immediate release of Rs 2000 to directly benefit 8.69 crore farmers.

12.  5 kg rice, wheat free for 80 crore people for three months

Under Pradhanmantri Garib Kalyan Yojana, 5 kg rice or wheat will be given for free for the next three months. Besides, 1 kg pulse available regionally will also be given for free to 80 crore people.

13.  5 KG additional rice or wheat per household to be given by the Government

For the next three months an addition 5KG of rice or wheat will be given free by the government ot the poor.

14.   Rs 50 lakh per person insurance for medical workers

We are fighting this emergecy on a war footing, said MoS Finance, Anurag Thakur while he uinveiled a Rs 50 lakh per person insurance for medical personnel.

15.  Govt announces medical insurance cover of Rs 50 lakh

FM Sitharaman has announced Rs 50 lakh medical cover per person for the government's sanitation workers, ASHA workers, doctors, paramedics, others, if they need it. The scheme is to benefit 20 lakh such workers.

16.  Govt's economic package includes relief for daily wage workers

We do not want people to stay hungry or without money in their hand, said FM Sitharaman

17.  FM press conference starts

FM Sitharaman starts press conference

18.  Centre can issue advisories to states to disburse funds from their respective labour welfare boards

In the case of construction workers, the centre can issue advisories to states to disburse funds from their respective labour welfare boards for those in the unorganised sector, like beedi, mine, cine workers.

19.  Cash transfers through direct benefit transfer are being considered

Cash transfers through direct benefit transfer are being considered for registered unorganised workers and a minimum sustenance level transfer to those who are out of the social security net.

20.  Centre may borrow more to fund the relief package

While the government may use money available with certain labour welfare funds, a limited fiscal space would be its biggest constraint. The Centre may borrow more to fund the relief package, which is expected to be announced, said senior officials.

21.  Stimulus plan could be as large as 2.3 trillion rupees

One of the sources, a senior government official, said the stimulus plan could be as large as 2.3 trillion rupees, but final numbers were still in discussion, Reuters reported.

22.  Cash transfers for unorganised workers, 7 kg subsidised grain per person

The Government is finalising an economic package, the broad contours of which are likely to include targeted monetary transfers to unorganised sector workers, especially daily wage workers, sops for small and medium enterprises and relaxations in banking sector prudential norms to help companies tide over the countrywide lockdown that is causing significant disruption across the economy.

23.  Why is corona package taking so long to clear?

There are, as experts have pointed out, real dangers with opening the spigots too much since, with very high levels of the real fiscal deficit, this will lead to a rise in bond yields which will defeat the purpose of the exercise. At the same time, there is little doubt millions of poor and lower middle-class people desperately need money to compensate for job losses; a direct cash transfer, possibly on a weekly basis, to them immediately is called for and it helps that thanks to the ration-shop DBT and the JanDhan accounts, the government already has their details and can transfer money quite quickly.

24.  Modi govt’s Rs 1.5 lakh crore warchest to defeat coronavirus economic slowdown

India is likely to agree an economic stimulus package of more than 1.5 trillion rupees ($19.6 billion) to fight a downturn in the country that is currently locked down to stem the spread of coronavirus, two sources familiar with the matter told Reuters.

25.  Extension in timeline for reference under IBC should have been announced without waiting further

"Extension in the timeline for reference under IBC could also have been announced without waiting till 30th April. Now everybody is looking for the Economic Task Force to complete its exercise and announcement of the economic package,” Hari Hara Mishra, Director, UV ARC, told Financial Express Online.

26.  No shortage of food products, essential goods

The government assured that there will be no shortage of food products and essential goods during the lockdown. Immediately after the announcement of 21 days lockdown, grocery stores in the country saw a burst of buyers rushing to gather enough grocery items to keep their household running in the lockdown. On delivery businesses, the cabinet minister has said that it is unfortunate that delivery agents are harassed at some places, but such cases are very few in number.

27.  Modi govt announces largest ration subsidy scheme for 80 Cr Indians

The government has approved the world’s largest food security scheme to benefit 80 crore people across the country. Out of them, every person will get 7 kg ration per month for the next three months, including wheat at a cost of Rs 2 per kg, instead of Rs 27 per kg; and rice at cost of Rs 3 per kg, instead of Rs 37 per kg, Cabinet Minister Prakash Javadekar said in a press conference yesterday.

28.  PFC extends support to fight COVID-19 in Rajasthan

Power Finance Corporation Ltd (PFC), a leading NBFC in the power sector has agreed to provide a financial assistance of Rs Fifty lakh to the Indian Red Cross Society, to fight coronavirus in Rajasthan.

29.  Census 2021, NPR postponed till further notice

Keeping in view the impact of coronavirus, the first phase of Census 2021 and the updation of NPR, which was to begin on various dates decided by the State/UT governments beginning 1st April 2020 and various related field activities, are postponed until further orders

30.  Don’t worry about deficit now, time for govt to spend to combat the virus, says C Rangarajan, former governor, RBI

With Covid-19 disrupting economic activities and people being confined to homes, the Centre and the Reserve Bank of India must come out with fiscal and regulatory measures to deal with the extraordinary situation without bothering too much about the fiscal deficit, former Reserve Bank of India governor C Rangarajan said.

31.   Govt classifies media as essential service; urges to work even harder

Stressing that media and communication is an essential service in this time of crisis due to coronavirus, the government has advised officers of I&B Ministry to be available around the clock & work even harder than usual to bring correct and authentic information to the masses.

32.  Cabinet has approved the continuation of Rebate of State and Central Taxes and Levies on textiles

Cabinet has approved the continuation of Rebate of State and Central Taxes and Levies (RoSCTL) from 1 April 2020 onward until such time that the scheme is merged with Remission of Duties and Taxes on Exported Products (RoDTEP). RoSCTL scheme for apparel and made-ups will be continued with effect from 1 April 2020 without any change in scheme guidelines and rates as notified by the Ministry of Textiles till such time that the RoSCTL is merged with RoDTEP

33.  Textiles Ministry sets up emergency control room to monitor production and supply of medical textiles

The Ministry of Textiles has set up an Emergency Control Room to monitor production and supply of medical textiles (N-95 mask, Body Coveralls and meltblown fabric) which are required in connection with Covid-19.

34.  PM to participate in G20 virtual summit tomorrow

Prime Minister Narendra Modi will participate in the G20 virtual summit tomorrow to discuss on the issues related to Coronavirus. The G20 has an important global role to play in addressing the COVID 19 pandemic. I look forward to productive discussions tomorrow at the G20 virtual summit, being coordinated by the Saudi G20 Presidency, PM said in a tweet.

35.  Renewable Energy projects under implementation will be given an extension of time

All Renewable Energy projects under implementation will be given an extension of time considering the period of lockdown and time required for remobilisation of workforce,  said a statement by the Ministry of New and Renewable Energy.

36.  Control room for real-time monitoring of the status of transportation and delivery of goods

Department for Promotion of Industry and Internal Trade (DPIIT), under the Ministry of Commerce and Industry, has set up a control room for real-time monitoring of the status of transportation and delivery of goods, manufacturing, delivery of essential commodities to the common man and the difficulties being faced by various stakeholders during the lockdown.

37.  Approval for recapitalisation of Regional Rural Banks

The Cabinet Committee on Economic Affairs has given its approval for continuation of the process of recapitalisation of Regional Rural Banks (RRBs) by providing minimum regulatory capital to RRBs for another year beyond 2019-20, that is, up to 2020-21 for those RRBs which are unable to maintain minimum Capital to Risk-weighted Assets Ratio (CRAR) of 9%, as per the regulatory norms prescribed by the Reserve Bank of India.

38.  Relief packages for MSMEs, daily wage workers on cards?

While the daily wage workers are left without jobs and stuck mid-way, FM Sitharaman may announce a relief package for the daily wage workers. Besides, announcements can also be regarding injecting liquidity in the market. The government has been in consultation with the Reserve bank of India, capital market regulator Securities and Exchange Board of India.

39.  Control room for real-time monitoring of the status of transportation and delivery of goods

Department for Promotion of Industry and Internal Trade (DPIIT), under the Ministry of Commerce and Industry, has set up a control room for real-time monitoring of the status of transportation and delivery of goods, manufacturing, delivery of essential commodities to the common man and the difficulties being faced by various stakeholders during the lockdown.

40.  Approval for recapitalisation of Regional Rural Banks

The Cabinet Committee on Economic Affairs has given its approval for continuation of the process of recapitalisation of Regional Rural Banks (RRBs) by providing minimum regulatory capital to RRBs for another year beyond 2019-20, that is, up to 2020-21 for those RRBs which are unable to maintain minimum Capital to Risk-weighted Assets Ratio (CRAR) of 9%, as per the regulatory norms prescribed by the Reserve Bank of India.

41.  Relief packages for MSMEs, daily wage workers on cards?

While the daily wage workers are left without jobs and stuck mid-way, FM Sitharaman may announce a relief package for the daily wage workers. Besides, announcements can also be regarding injecting liquidity in the market. The government has been in consultation with the Reserve bank of India, capital market regulator Securities and Exchange Board of India.

42.  Govt monitoring availability of essential commodities in market, says Ram Vilas Paswan

Union Food Minister Ram Vilas Paswan on Wednesday said the government is monitoring the availability of essential commodities in the market amid nationwide lockdown for next 21 days to check the spread of coronavirus outbreak.

43.  PSU banks come to rescue before govt’s economic package; SBI, Indian Bank, others offer quick credit

The businesses suffering from a slump in demand and zero footfall in the market can now look up to many PSU banks to get emergency credit to carry on their endeavors. State Bank of India, Indian Bank, Uco Bank, Bank of India (BOI), and Union Bank of India (UBI), have announced emergency credit lines for quick loans.

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Knowledge increases by sharing but not by saving !

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Ravi Garg, ACS

Company Secretary & Compliance Officer            

csravi2014@gmail.com

Feel free to contact with us.