To fight against Covid-19 pandemic the government amended the CSR rules. The companies working on “research and development activity of new vaccine, drugs and medical devices in their normal course of business” will be eligible to get the benefits as per the new changes. Government is temporarily allowing the investment towards such efforts to be considered as fulfillment of a company’s Corporate Social Responsibility (CSR) obligations.
Now pharmaceutical, vaccine and medical device firms, those are expected to undertake research and development of new drugs, vaccines and medical devices as part of their regular business activities can claim the CSR benefits.
The Ministry of Corporate Affairs has inserted a provision in The Companies (Corporate Social Responsibility) Rules, 2014, that the firms can claim CSR benefits for such activities until the 2022-2023 financial year. The amendments temporarily remove a provision that would have excluded “activities undertaken in pursuance of its (the company’s) normal course of business” from being considered as CSR activities. As the relaxation is applicable for three years till 2022-23, the firms R&D activity must be carried out in collaboration with specified public institutions. The Objectives to enhance the flow of funds towards Covid-19 vaccine and drug development.
For the noble cause and fight with Covid the government has expanded the scope of corporate social responsibility (CSR). It will help the companies engaged in research and development (R&D) of new vaccines, drugs and medical devices. Thus the companies can contribute their CSR funds to public funded universities, Indian Institutes of Technology (IITs), Department of Science and Technology (DST),Department of Atomic Energy (DAE), Department of Biotechnology (DBT), Department of Pharmaceuticals, including the institutions under the ministry of AYUSH.
Know, what is Corporate Social Responsibility (CSR)?
The Corporate Social Responsibility (CSR) is a corporate initiative to assess and take responsibility for the company’s effects on the environment and impact on social welfare and development.
The Companies (Corporate Social Responsibility) Rules, 2014
•The Ministry of Corporate Affairs, Government of India has recently notified the Section 135 of the Companies Act, 2013 along with Companies (Corporate Social Responsibility Policy) Rules, 2014.
• Under this the companies with net worth of Rs 500 crore or more, or a turnover of Rs 1,000 crore or more, or net profit of Rs 5 crore or more, are required to spend 2% of their average net profit of the preceding three years on CSR activities.
•Normally approved activities under Schedule VII of CSR include eradicating extreme hunger, poverty, promotion of education, promoting gender equality and women’s empowerment as well as reducing the child mortality, improving maternal health and combating diseases. Ensuring environmental sustainability and prompting employment enhancing vocational skills are other activities approved under CSR.
As per the Recent amendment to Schedule VII of Companies Act “PM CARES Fund” included as a Corporate Social Responsibility. Centre makes amendment to Schedule VII of Companies Act, 2013 to include “PM CARES Fund” as a Corporate Social responsibility. So now the contribution made to the PM-CARES Fund shall qualify as CSR expenditure.
Remarks: Many NGOs and social activities are raising question on donation of CSR fund to PM-CARES fund. Its all because it may cerate fund shortage to NGOs working at grassroots level with the support of CSR fund, which is being released by company to them. The cause of worry is that if the donation will be diverted towards to PM-CARES Funds then many ongoing projects which are currently supported under CSR funds by companies may discontinued due to lack of funds.