Center allows companies to spend CSR funds on research and development to fight COVID-19
The Ministry of Corporate Affairs (MCA) has made two amendments in the Corporate Social Responsibility rules for companies
Companies can now spend their Corporate Social Responsibility (CSR) funds on Research and Development (R&D) to help fight COVID-19 pandemic. An official told Hindustan Times that the government took this decision in line with the Prime Minister’s directive to encourage new drug discoveries for COVID-19.
The Ministry of Corporate Affairs (MCA) has made two amendments in the CSR rules that would allow companies to spend their CSR funds in R&D activities related to new vaccines, drugs and medical devices in three financial years starting from 2020-21, said the report.
An official said the amended portions come in Schedule VII to include R&D for development of drugs to cure COVID-19 as one of the approved CSR activities. He said contributions to R&D projects in the field of science, technology, engineering and medicine, funded by the central and state governments or any public sector entity would also be counted under CSR.
The Hindustan Times report said that as per the Companies Act, firms with a net worth of Rs 500 crore or more, or turnover of Rs 1,000 crore or more, or net profit of Rs 5 crore or more in the immediately preceding financial year, to mandatorily spend 2 per cent of average net profit of the preceding three years on CSR. The report further said that money earmarked for spending on CSR activities in a year is about Rs 15,000 crore.
CSR funds are also used to eradicate poverty, hunger, promote education and women empowerment etc.