Spending of Corporate Social Responsibility (CSR) Funds for Covid-19

: Spending of Corporate Social Responsibility (CSR) Funds for COVID-19
: Spending of Corporate Social Responsibility (CSR) Funds for COVID-19.


Corporate Social Responsibility (CSR) is an important aspect of business. Corporate social responsibility (CSR) determines how companies manage their business processes to produce an overall positive impact on the society.

Corporate Social Responsibility as per Section 135 of Companies Act, 2013

Applicability – Section 135 of the Companies Act, 2013 provides that it will apply to every company which satisfy any one of the following criteria:

  • net worth of Rs. 500 crores or more,
  • turnover of Rs. 1000 crores or
  • a net profit of Rs. 5 crores or more during any financial year

The Board 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.

Committee Formation– The Companies to which CSR is applicable should constitute a committee named as CSR Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director.

[Provided that where a company is not required to appoint an independent director under sub-section (4) of section 149, it shall have in its Corporate Social Responsibility Committee two or more directors

Role of Committee – The committee shall be responsible to:

  • formulate and recommend to the Board a Corporate Social Responsibility Policy
  • recommend the amount of expenditure to be incurred on the activities
  • monitor the Corporate Social Responsibility Policy of the company from time to time

The CSR expenditure can be utilized towards activities specified in Schedule VII of Companies Act.

Admissible CSR expenditure for COVID-19?

The spread of Corona Virus (COVID-19) in India, its declaration as a pandemic by World Health Organization (WHO) and the decision taken by Government of India to treat COVID-19 as a notified disaster and the permissibility for spending Corporate Social Responsibility (CSR) funds for COVID-19 are very pertinent recent developments.  In this context, the Ministry of Corporate Affairs (MCA) has issued a circular dated 23rd March 2020 and clarified on the spending of Corporate Social Responsibility (CSR) funds for COVID-19.

The Government of India has set up the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund’ (PM CARES Fund) with the primary objective of dealing with any kind of emergency or distress situation such as that posed by COVID- 19 pandemic. Further MCA through its office memorandum has provided clarification on contribution to PM Cares Fund as eligible CSR activity under item no. (viii) of the Schedule VII of Companies Act, 2013.

Link for Circulars/Memorandum/FAQs:

A:  Funds may be spent on various activities related to COVID-19. Further, the contribution may be spent under item nos. (i) and (xii) of the Schedule VII of the Companies Act,2013 relating to the promotion of health care, including preventive health care and sanitation, and disaster management.

Item no. (i) and (xii) of Schedule VII of the CompaniesAct,2013 are listed below:

(i)        Eradicating hunger, poverty and malnutrition, promoting health care including preventive 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.

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


  • For item no. (i) following items may be included:
  • Social Business Projects: “giving medical and Legal aid, treatment to road accident victims.”
  • Provisions for aids and appliances to the differently- able persons
  • Trauma care around highways in case of road accidents
  • Supplementing of Govt. schemes like mid-day meal by corporates through additional nutrition would qualify under Schedule VII.
  • Disaster management can cover a wide range of activities that can be appropriately shown under various items listed in Schedule VII. For example,
  • medical aid can be covered under ‘promoting health care including preventive health care.
  • food supply can be covered under eradicating hunger, poverty, and malnutrition.
  • supply of clean water can be covered under ‘sanitation and making available safe drinking water.

B:      In pursuant to Item no. viii of Schedule VII of the Companies Act,2013, contribution to any fund set up by the Central Government for socio-economic development and relief qualifies as CSR expenditure. Therefore, any contribution to a separate fund called ‘PM CARES Fund’ set up by the Government of India shall qualify as CSR expenditure under the Companies Act, 2013.

C:       Contribution made to the State Disaster Management Authority to combat COVID-19.

D:      If any ex-gratia payment is made to temporary / casual workers/ daily wage workers over and above the disbursement of wages, specifically for the purpose of fighting COVID 19 as an onetime exception provided there is an explicit declaration to that effect by the Board of the company, which is to be duly certified by the statutory auditors.

Non- admissible CSR expenditure for COVID-19?

A:          Contribution made to ‘Chief Minister’s Relief Funds’ or ‘State Relief Fund for COVID-19.’

B:          Payment of salary/ wages to employees and workers during the lockdown period (including the imposition of other social distancing requirements).

C:          Payment of wages to temporary or casual or daily wage workers during the lockdown period.


The circulars and FAQ’s provided by the Ministry of Corporate Affairs (MCA) helps Companies to deploy the CSR funds for COVID-19 relief. Corporates that have unspent CSR funds can spend the same towards COVID-19. Through rightful CSR spend, corporates can not only comply with the law but also immensely benefit the nation at large in the present economic scenario.

Disclaimer: The entire contents of this document have been developed based on relevant provisions and are purely the views of the authors. Though the author has made utmost efforts to provide authentic information, however, the authors and the company expressly disclaim all and any liability to any person who has read this document, or otherwise, in respect of anything, and consequences of anything done or omitted to be done by any such person in reliance upon the contents of this document.

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