The Ministry of Corporate Affairs has published Frequently Asked Questions (FAQs) on Corporate Social Responsibility (CSR) for representations from stakeholders seeking clarifications on eligibility of CSR expenditure related to COVID-19 activities, on 10th April, 2020.
The FAQ clarifies that contribution made to ‘PM CARES Fund’ and to State Disaster Management Authority to combat COVID-19 Management Authority shall qualify as CSR expenditure. However, contribution made to ‘Chief Minister’s Relief Funds’ or ‘State Relief Fund for COVID-19’ shall not qualify as CSR expenditure.
The MCA clarified that payment of salary and wages will not qualify as CSR expenditure and provided the following reasoning
“payment of salary/ wages in normal circumstances is a contractual and statutory obligation of the company. Similarly, payment of salary/ wages to employees and workers even during the lockdown period is a moral obligation of the employers, as they have no alternative source of employment or livelihood during this period. “
It can be rightly inferred that payment of salary and wages when there is no work qualifies as a moral obligation and not a statutory, legal or contractual one.
However, payment of ex-gratia to temporary /casual /daily wage workers shall qualify as CSR expenditure.
Click here to read the FAQ.
