In a bid to boost the immunization efforts, the Corporate Affairs Ministry (MCA) has now permitted companies to spend their Corporate Responsibility (CSR) funds for Covid vaccination.
The funds that companies will spend on the vaccination for individuals in addition to their employees and their families, will now be considered as CSR expenditure, the ministry said.
Clarifying that the implementation of the 2013 Companies Act by the ministry said that only the companies vaccinating people other than the kin of their employees are eligible.
“It is further clarified that spending of CSR funds for COVID-19 vaccination for persons other than the employees and their families, is an eligible CSR activity,” the circular said.
“The companies may undertake the aforesaid activity subject to fulfillment of Companies (CSR Policy) Rules, 2014 and the circulars related to CSR issued by this ministry from time to time,” it added.
After Mauritius, India is the second country to mandate CSR spend by the companies in the year 2014. The special provision in the Company Law was made to ensure that corporate firms spend at least 2 percent of their average net profits earned over the preceding three years, in social work.
Usually, this fund is spent by the companies on the development projects initiated by the nonprofits or their own CSR activities to engage the human resource.
But this is not the first time that the Modi government has diverted the essential CSR funds, which is the lifeboat of the majority of nonprofit organizations, to the Union government.
Last year after the Covid pandemic hit India in March, the Union government asked the companies to donate to the PM CARES fund, which will be considered CSR donations.
The Coordinator of NITI Aayog Standing Committee, Amod Kanth said, “The amount that we get from CSR (Corporate Social Responsibility) funding has been drastically cut down.
I think this year we will definitely see a 40-50% cut in our CSR funding. One of the major reasons (behind this cut) is the PM CARES (Prime Minister’s Citizen Assistance And Relief in Emergency Situation) Fund.”
This time the company representatives spoke on the ministry’s move, saying that the vaccination of employees and their families should have been considered as well.
“While this is an expected clarification from the Ministry on eligible spending of CSR for Covid, the MCA should have considered the spirit of CSR expenditure and the need of the hour and extended eligibility to expenditure on vaccination of employees and their families as well,” Manu Varghese, Partner at White & Brief Advocates & Solicitors said.
Another statement came from Harish Kumar, a Partner at L&L Partners, who said “While this CSR relaxation would further help corporates involve in nationwide vaccinations, non-availability of CSR benefit for vaccinations of employees/family members, prima facie, does not appear to be specifically restricted in law.”
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