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Companies gain new CSR benefit for March 2020 donations to PM CARES Fund

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PM CARES
 
Ever since the pandemic became the big news of 2020, donations for the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund) have been pouring in from responsible citizens and corporates alike. Prime Minister Narendra Modi is the ex-officio Chairman of the dedicated national fund formed for the purposes of dealing with emergency or distress situations, like the COVID-19 pandemic.
The PM CARES Fund consists entirely of voluntary contributions from individuals and organizations, and does not get any budgetary support. Yet it had the biggest contributions coming in from all sectors, public and private. This is because of an appeal that the Ministry of Corporate Affairs made on March 30 last year, to the Managing Directors and CEOs of top 1000 companies (in terms of market capitalisation). The government urged these corporates to generously contribute to the national fund in this time of crisis.
The appeal also declared that such contributions may, inter-alia, include the unspent CSR amount, and an amount over and above the minimum prescribed CSR amount for FY 2019-20, which can later be offset against the CSR obligation arising in subsequent financial years. Needless to say, India Inc made donations in crores of rupees apart from other relief work at ground zero. Many of them contributed CSR funds to the ‘PM CARES Fund’ over and above their prescribed CSR amount for fiscal 2020.
The Ministry has lived up to its promise for the companies that paid heed to its call for monetary giving last year. The MCA has sent out an official circular for setting off the excess CSR amount spent in March 2020 by way of contribution to the PM CARES Fund against the mandatory CSR obligation for FY 2020-21. Such donations to the national fund that were done in March 2020 and are over and above the company’s CSR obligations for fiscal 2020, can be set off against the next year’s spending obligations. However, there are certain riders to avail of this benefit:
1. The amount offset should factor in the unspent CSR amount for previous financial years.
2. The company’s Chief Financial Officer (CFO) has to certify that the contribution to PM CARES was indeed made on 31st March 2020 in response to the MCA’s appeal. The statutory auditor of the company also needs to certify this.
3. The details of the particular contribution is disclosed separately in the Annual Report on CSR as well as in the Board’s Report for FY 2020-21 in terms of section 134 (3) (o) of the Act.
4. It has the approval of the competent authority.