Seeking more funds for the fight against coronavirus pandemic, the government has appealed to top corporates to make contributions to the PM-CARES Fund. Donations made to the fund will also be exempt from tax.
Corporate Affairs Secretary Injeti Srinivas has made an appeal for contributions to chiefs of top 1,000 companies in terms of market capitalisation.
The corporate affairs ministry, which is implementing the Companies Act, has already clarified that contributions to the fund will qualify as CSR expenditure.
"Your contribution to the fund would complement and supplement government efforts towards upscaling the public healthcare infrastructure in the country to meet this unprecedented challenge," Srinivas said in a letter.
The Prime Minister's Citizen Assistance and Relief in Emergency Situations Fund (PM-CARES Fund) has been set up to raise money to deal with any emergency situation like due to COVID-19 and provide relief to the affected.
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The contribution to PM-CARES Fund will be used for the most critical activities pertaining to COVID-19 such as testing, setting up of isolation wards, procurement of personal protective gear and ventilators.
All companies donating to the fund before March 31, whether in old or new tax structure, will get tax exemption under Section 80G of the I-T Act, the letter said.
From April 1, only those companies which have chosen to remain in old tax structure would get the benefit, it added.
On March 28, the ministry clarified that contributions by companies to the fund would qualify as Corporate Social Responsibility (CSR) expenditure under the companies law.
"As you are the chief executive of a highly successful company, I would like to appeal to your company to contribute generously to the PM CARES Fund, which may also include any unspent CSR amount, if applicable," the letter, dated March 30, said.
Even if the prescribed amount of CSR contribution has been made, companies could contribute more which can be later offset against the CSR obligation arising in subsequent years, if desired, it added.
Corporates have spent Rs 52,000 crore towards social welfare activities in the last five financial years and now making contributions to the fund would further help them meet their obligations under the companies law, Srinivas said on March 29.
Under the Companies Act, 2013 -- which is implemented by the ministry -- certain classes of profitable corporates are required to shell out at least 2 percent of their three-year annual average net profit towards CSR activities in a financial year. This provision came into force on April 1, 2014.
So far, around 1.8 lakh companies have filed CAR (Company Affirmation of Readiness towards COVID-19) 2020, affirming their readiness to contribute to contain the spread, morbidity and mortality of the disease.
The web form -- CAR is to be filed by an authorised signatory of companies and LLPs concerned.More than 1,250 people have tested positive for coronavirus and the death toll is over 30 in the country.