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MCA says, CSR Funds Can be Used to Setup Covid Amenities

The government on Thursday allowed spending of Corporate Social Responsibility (CSR) funds for setting up makeshift hospitals and Covid-care facilities, including vaccination for general public, to reduce stress on existing healthcare infrastructure, two officials close to the matter said.

An official clarification issued by the Ministry of Corporate Affairs (MCA) said “that spending of CSR funds for ‘setting up makeshift hospitals and temporary Covid-care facilities’ is an eligible CSR activity” and companies may undertake it in consultation with state governments. The communication is, however, silent on vaccination.

Spending of CSR funds to prevent spread of Covid-19 pandemic has already been an approved CSR activity since March 23, 2020, which also includes vaccination and distribution of medicines and preventive materials, if undertaken for the general public, the officials mentioned above said, requesting anonymity.

“Companies can use the fund for vaccination of their staff as well as general public as preventive healthcare activities, but it cannot be exclusively for company employees only,” said one of the officials with direct knowledge of the matter.

Companies can spend more money from their CSR accounts to prevent Covid-19 pandemic now and get the additional amount adjusted in subsequent years, the official said.

The Companies Act requires firms with a net worth of ₹500 crore or more, or turnover of ₹1,000 crore or more, or net profit of ₹5 crore or more in the immediately preceding financial year to mandatorily spend 2% of average net profit of the preceding three years on the CSR. Money earmarked for spending on CSR activities in a year is about ₹15,000 crore.

After issuing the official clarification, corporate affairs secretary Rajesh Verma wrote to the top management of over 1,000 companies, appealing to them for “more coordinated and focused approach” to provide immediate relief to the people.

“I would like to draw your attention to the excellent initiatives taken by the DRDO and the CSIR in setting up temporary Covid-care facilities and makeshift hospitals,” he said adding that this could also be replicated by other firms.

In an appeal to CEOs, Verma said: “Further, in view of the ongoing work-from-home mode of working, you may have some vacant buildings at your disposal. You may like to consider converting these buildings to temporary Covid Care facilities.”

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