-Tania Das K.


The article focuses on India’s Corporate Social Responsibility legislation and the recent changes made in the same. CSR is a self-regulation model by which businesses give back to the society of which they too are a part of. In the backdrop of the global pandemic, the Ministry of Corporate Affairs allowed firms to spend their funds on Prime Minister’s Citizen Assistance and Relief in Emergency Situations (PM CARES) and other Covid–19 related activities. These funds are expected to help the government and the society to overcome the disturbances caused by the pandemic in our socio-economic lives.

KEYWORDS: Corporate Social Responsibility, Prime Minister’s Citizen Assistance and Relief in Emergency Situations (PM CARES), Triple Bottom Line model, Prime Minister’s National Relief Fund (PMNRF)


Corporate Social Responsibility (CSR) is a self-regulation initiative taken by companies wherein they invest in activities for the wellbeing of society and the environment. CSR, which is often referred to as corporate citizenship, aims to ensure that the company’s operations are ethical and beneficial for society. By the CSR, businesses “integrate social, environment, ethical and human right concerns into their core strategy, operations, and integrated performance, in close collaboration with their stakeholders.”


 The Companies Act, 2013, which replaced the Companies Act, 1956, introduced statutory Corporate Social Responsibility obligations for firms that fulfill certain criteria. Thus, in 2014 India became the first country to make CSR mandatory. The new Act was expected to promote self-regulation and introduce novel concepts like one-person company, small company, and dormant company.

By section 135 of The Companies Act, 2013, a company would be liable for CSR obligations if, in a financial year, it has

  (i) A net worth of Rupees 500 crores or more; or

  (ii) A turnover of Rupees 1000 crores or more; or

  (iii) A net profit of Rupees 5 crores or more.


Companies that fulfill any one of these should constitute a Corporate Social Responsibility Committee of the Board. It will have three or four directors. At least one of these directors shall be an independent director. The committee will formulate and recommend a CSR policy and the expenditure to be incurred on the activities.

In every financial year, the company needs to spend at least two percent of its average net profits from the three immediately preceding financial years for its CSR activities. If the company does not spend the earmarked amount, its report should specify why it was not used.

The aim of introducing CSR was not only to facilitate investments in social welfare activities but also for using the knowledge and skills of these companies to help develop the community around them. Thus, CSR aims to protect the interest of the society at large while not compromising the firm’s economic viability. However, companies at times fail to act by the bigger picture. They feel that CSR is merely an obligation which they need to follow. They are quite often apathetic to the real goals behind introducing CSR.


CSR activities were carried out in India even before it was made mandatory by the Ministry of Corporate Affairs (MCA). For instance, in 2014 Tata group had said that it had spent over Rs 8,000 crore on CSR activities over the last ten years. Philanthropic trusts hold a whopping sixty-six percent of the equity share of Tata Sons. These trusts support education, health, livelihood generation, and art and culture.


Today firms understand the importance and need for sustainability. They are moving towards the adoption of the Triple Bottom Line model (TBL). This concept evaluates the performance of companies in three areas- social, economic, and environmental. TBL aims for social justice, economic prosperity, and environmental quality. John Elkington coined the term ‘Triple Bottom Line’ in 1991.

According to the concept of TBL, the primary responsibility of a firm is to its stakeholders than to its shareholders. TBL seeks to analyse the commitment of a corporation towards society, i.e., its stakeholders.


The unanticipated pandemic and the subsequent lockdown introduced to curb the spread of the virus affected millions. As India geared up to fight against the Novel Coronavirus, the Indian Government came up with a public charitable trust, Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund), to gather resources to overcome such emergencies.

It was set up with the Prime Minister as its ex-officio chairperson to provide assistance in times of emergency or distress like the one put forth by the virus. Minister of Defence, Minister of Home Affairs, and Minister of Finance, Government of India would be serving as the fund’s ex-officio Trustees.

The fund consists of entirely voluntary contributions by individuals or organisations. The Government does not finance it and the fund is exempted from paying Income Tax as per Section 10(23) (c) of the Income Tax Act, 1961.

The Ministry of Corporate Affairs had issued a memorandum on March 28, 2020, qualifying PM CARES to receive CSR contributions from corporates. According to Schedule VII of the Companies Act, 2013, contribution to any fund set up by the Central Government for socio-economic development and relief qualify as CSR expenditure. Since the PM CARES was set up to provide relief in emergencies, the Ministry clarified that the contributions made to PM CARES would qualify as CSR.


The Prime Minister’s National Relief Fund (PMNRF) was set up in 1948 to collect funds to assist the displaced people during the Partition. Now the fund is used to provide relief in times of natural disasters and help cover the expenses of medical treatments like heart surgery, cancer treatment of needy people, and acid attack survivors. The contributions made to PMNRF are notified for 100% deduction from taxable income under section 80(G) of the Income Tax Act, 1961.

In 2015, a high-level committee had submitted its report where they stated that companies might get tempted to direct their CSR contributions to the (PMNRF) to get tax exemptions. If the companies can contribute to PMNRF to fulfill their CSR obligations, it would destroy the spirit of CSR. IN 2016, the Ministry of corporate affairs published a circular wherein it was clearly stated that CSR should not be used to finance government schemes and that “CSR projects should have a larger multiplier effect.”

Section 135 of the companies act was introduced to engage the corporates in discharging their social responsibilities with their innovative ideas and skills. The contributions made to the PM CARES will be uncapped and are wholly exempted from tax liabilities. So by contributing to the PM CARES, the businesses can fulfill their CSR liabilities and at the same time are exempted from tax liabilities. If the businesses are permitted to contribute to government funds as part of their CSR obligations, it will defeat the actual purpose behind introducing CSR.

A second high-level committee in its 2019 report also recommended that contributions to Central Government funds be discouraged as it is not per the philosophy behind CSR.

The main idea behind CSR was not just to involve the business in social development through the contribution of funds but also to use their capabilities and managerial skills to benefit society. If they could evade their societal obligations by contributing to government funds, it would not be of much use.


On January 13 this year, the MCA clarified that the funds spent by corporates for public outreach and awareness programmes related to the covid-19 vaccination programme would be considered as CSR activity. This move comes after requests by India Inc. India Inc is a term used by the media to refer to India’s formal sector. Such fundings will be eligible as CSR contributions under the categories of promotion of healthcare, promoting education and disaster management (item no. (i), (ii) and (xii) of the Companies Act 2013). However, such expenditure cannot be done solely to benefit the workers or their families.

In late March last year, around the same time when India went into lockdown to curb the spread of the virus, the Ministry had said that the expenditure by the business for Covid related activities is an eligible CSR activity.

Later in August, MCA amended the CSR rules by which the companies engaged in Research and Development (R&D) of vaccines, drugs and medical devices related to COVID-19 for financial years 2020-21, 2021-22 and 2022-23 can classify the expenditure thus incurred as a part of their CSR spending even if it was carried out as a part of its ordinary course of business.

 To avail the benefits of this amendment, the company would be subjected to the following conditions-

  1. “Such research and development activities shall be carried out in collaboration with any of the institutes or organisations mentioned in item (ix) of Schedule VII to the Act.
  2. Details of such activity shall be disclosed separately in the Annual Report on CSR included in the Board’s Report.”

In times of crises like this, the companies can play a crucial role. A public-private partnership is needed. Businesses can support the vaccine drives and other outreach programmes. Vaccinating the whole of India is a strenuous task. Businesses can go a long way in helping the vaccine distribution by helping the government cover the expenses. They can also facilitate the distribution of the vaccines by providing the necessary infrastructure and logistics.


Corporate Social Responsibility is an efficient way by which companies can give back to the community around them. The pandemic has brought into picture as to how businesses can help the community in times of need. There are infinite opportunities available for the business to the same. A combined approach by the Government and the businesses can help find a solution to the pandemic induced social dilemmas.

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