The Centre has notified that contributions made by business and corporates to the PM CARES Fund will be considered as part of Corporate Social Responsibility (CSR) of companies.
“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,” a Government notification dated May 26 said. Further, it added that this notification shall be deemed to have come into force on March 28, 2020.
As Covid-19 pandemic requires more and more resources, the Government set up PM CARES Fund as a public charitable trust. It intends to fulfil the need for having a dedicated national fund with the primary objective of dealing with any kind of emergency or distress situation, like posed by the Covid-19 pandemic and to provide relief to the affected.
The Prime Minister is the ex-officio Chairman of the PM CARES Fund, and Minister of Defence, Minister of Home Affairs and Minister of Finance are ex-officio trustees of the Fund.
The fund consists entirely of voluntary contributions from individuals/organisations and does not get any budgetary support.
Donations to PM CARES Fund would qualify for 80G benefits for 100% exemption under the Income Tax Act, 1961.
Earlier, CSR activities included eradicating extreme hunger and poverty, promotion of education, promoting gender equality and empowering women, reducing child mortality and improving maternal health ensuring environmental sustainability, employment enhancing vocational skills, social business projects and contribution to the Prime Minister’s National Relief Fund or any other fund set up by the Central Government or the State Governments for socio-economic development and relief and funds for the welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women.
In the wake of the Covid-19 pandemic, the list was expanded to include the promotion of health care, expenses towards preventive health care and sanitation and disaster management. Now, the list has been expanded with PM CARES Fund.
India has mandated, under Companies Act 2013, that every company having net worth of at least ₹500 crore, or turnover of at least Rs. 1,000 crore or a net profit of at least Rs. 5 crore to 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 on CSR.
In case of not spending the amount under CSR, the company will report why it has not done so.
At the time of setting of PM Cares Fund, the Government did mention that will also qualify to be counted as Corporate Social Responsibility (CSR) expenditure under the Companies Act, 2013.
Many of the companies, especially Public Sector Enterprises, made contributions, but in the absence of legal sanctions, questions were raised on such contributions.