CSR funds may be used for COVID-19 relief, clarifies MCA

Team Vinod Kothari & Company | corplaw@vinodkothari.com

Updated on 29th March, 2020

Like all other public agencies, MCA has been taking a series of steps in the wake of the rapidly spreading COVID-19 and issued clarification[1] on spending of CSR funds for COVID 19 stating that the amount spent on COVID-19 by companies will count towards CSR spending. The activities falling under item nos. (i) & (xii) of Schedule VII of Companies Act, 2013 undertaken due to COVID 19 shall qualify as CSR activity which covers the following:

  • Eradicating hunger, poverty and malnutrition, promoting health care including preventive health care and sanitation including contribution to the Swach Bharat Kosh set-up by the Central Government for the promotion of sanitation and making available safe drinking water.
  • Disaster management, including relief, rehabilitation and reconstruction activities.

Subsequently, the Ministry on 28th March, 2020 has also clarified by way of an office memorandum, that companies contributing towards recently formed Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (‘PM CARES Fund’) shall also qualify as CSR expenditure under item (viii) of Schedule VII of Companies Act, 2013.

Hence, this is the right occasion, and unarguably, one of the noblest causes, to use CSR funds in whatever way, one may think of for the welfare of society.

Notably, substantial CSR money remains unspent, very often for want of appropriate CSR projects. Many companies have to explain the same by finding some reason or the other. Currently the country is passing through an epidemic that has affected the whole world. Hence, companies may come forward and spend their unspent CSR budgets. Indeed companies are also welcome to over-spend this year’s budget pursuant to a proposal in the Companies Amendment Bill which permits carry forward of excess spending as well.

Questions are often being asked – can the company include the expenditure incurred for COVID-19 preparedness for its own employees and workmen – say, giving of masks, sanitizers, or similar expense, as a part of its CSR spending?

Our answer to this question is the same as what we have continuously answered as a part of our FAQs[2] on CSR that CSR is spending on a social cause. An employer spending for the well being, safety or welfare of employees is performing the employer’s legal or moral obligation. That cannot be regarded as CSR. However, if the company spends on COVID-19 preparedness, either by itself or through implementing agencies, for a wider section of public, and its employees or their families are also the beneficiaries of such an exercise, there is no denial as to eligibility of the same as CSR spending.

Our detailed write ups on CSR may be viewed here:

Proposed changes in CSR Rules

Draft CSR Rules Make CSR More Prescriptive

CAB, 2020: Bunch of Proposals for revamping CSR Framework



8 replies
  1. Khushika Setia
    Khushika Setia says:

    if a company spend its CSR funds to donate something to some institution. Can that institution utilise the funds for other than foe which Company donated?

    • Smriti Wadehra
      Smriti Wadehra says:


      The applicability and spending for the purpose of CSR is determined on the basis of financial statements of immediately preceding financial year. However, if the financial statements are not audited the Company may approve and initiate spending for the purpose of CSR on the basis of unaudited financial statements which can be ratified later when the financials are audited.

  2. Abhishek Seth
    Abhishek Seth says:

    Dear Sir Ma’am,
    Request you to clarify, can csr funds be contributed to covid funds setup by respective state govts?

  3. Abhishek
    Abhishek says:

    Dear Sir / Madam,
    Request you to clarify if companies can contribute csr funds to covid funds setup by respective state govts?

    • Pammy Jaiswal
      Pammy Jaiswal says:


      In general, contributions/donations do not qualify as a CSR spending, except to specific relief funds which in turn do not include State Govt funds.

      However, if it is a contribution for a specific project and the state govt/implementing agency gives a utilization of the amount contributed, in our view, the same should qualify as a CSR.

    • Pammy Jaiswal
      Pammy Jaiswal says:


      Any activity exclusively for the benefit of the employees will not qualify as a CSR activity. This view has always been taken by the Ministry and we also agree to the same.


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