The Great Lockdown | Volume 1 | Issue 2
Have you contributed to Covid-19 relief funds,yet? Do you have your CSR policy updated?
Seismic wave of contribution to covid-19 relief funds have triggered since the rise of pandemic. Not only individuals but even corporates have put profits secondary and have prioritized lending support to society. To encourage contributions and to reward the noble act, the Centre has promulgated 100% tax relief on contributions made to relief funds.
But there are caveats… Which ones to invest in and how to claim the benefits. In this article, we have highlighted how contributing to certain funds can result in convergence of maximizing profits and corporate social responsibility.
What’s the Deal?
No changes to activities covered under schedule VII of Companies Act.
Contributions made to ‘PM Cares Fund’ and ‘State Disaster Management Authority’ will qualify as CSR spend.
Ex-gratia payments (for purpose of Covid-19) made to casual and daily wage labors over and above their wages will form part of CSR spend.
100% tax reliefs on alternate CSR spends.
The Caveats…
Alternate CSR spends will be admissible as a one-time exception.
Contributions made to ‘CM Relief Fund’ and ‘State Relief Fund for Covid-19’ shall not qualify as alternate CSR spend.
Such contributions will be eligible for tax deductions only if CSR policy was updated prior to disbursement of funds.
Regular salary payments to casual and daily wage labors or any payments to political party (directly or indirectly) will not be admissible.
Close the deal…
- Corporate should update CSR policy to include alternate CSR spends and obtain approvals from authority.
- Plan for contributions to be made and ensure disbursements are made to eligible sources.
- Claim tax benefits.
