The Ministry of Corporate Affairs has brought in a Gazetted notification that will allow PM CARES fund to receive Corporate Social Responsibility fund from the Companies.
The notification was issued on May 26 by the Ministry of Corporate Affairs, it states that Sub-section (1) of section 467 of the companies act 2013 has been amended to make PM CARES fund eligible to receive CSR funding from corporates.
Before this, only the Prime Minister’s National Relief Fund was eligible to get CSR funding. The donations made by the Corporates to PM CARES in the last couple of months will now be considered as CSR contributions.
The notification states, “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.”
The notification stated that it will be implemented with a retrospective effect and shall deem to have come into force on March 28. The MCA had issued a notification on the same date saying that contribution towards PM CARES Fund is eligible as a CSR activity, but the relevant section of the Companies Act was not amended.
Corporate Social Responsibility
Corporate Social Responsibility aims to contribute to the societal goals of a philanthropic, activist, or charitable nature by engaging in or supporting volunteering or ethically-oriented practices. CSR is mandatory for the companies with net worth with 500 crores and more, or companies with a turnover of more than 1,000 crores or greater, or companies with a net profit of 5 crores or more.
According to section 135 of the Companies Act, companies have to spend 2% of its average net profit in the last three years towards fulfilling its corporate social responsibilities.
The PM CARES fund
Prime Minister Narendra Modi had constituted Prime Minister’s Citizen Assistance and Relief in Emergency Situations on 27 March and appealed the citizens of the country to monetarily contribute towards this effort by making donations.
The public charitable trust with the name ‘Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund’ (PM CARES Fund)’ is a dedicated national fund with the objective of dealing with any kind of emergency or distress situation, like the current Covid-19 pandemic. Prime Minister is the Chairman of this trust, and its members include Defence Minister, Home Minister and Finance Minister.
The fund consists entirely of voluntary contributions from individuals/organizations and does not get any budgetary support.
The donations made to PM CARES Fund will be exempted from Income Tax under section 80(G) of the Income Tax act. PM CARES fund also got exemption under FCRA and a separate account for receiving foreign donations has been opened and will be made operational soon.