The targeted amendment in the CSR rules permitted such companies to categorise as CSR activity any Covid-related R&D activity even if undertaken as part of its normal course of business.
“With this carve out the government has done only for this category of companies, even internal expenditure they will be able to count as CSR expenditure so some of this funding can go into the areas which are really the need of the hour,” said Madhusudhan Kankani, partner at Deloitte India.
While the relaxation is applicable for three years from the ongoing fiscal till FY23, it came with the rider that such R&D activity must be carried out in collaboration with specified public institutions.
Throwing light on the need for the amendment, Pavan Vijay, founder of Corporate Professionals said, “If India requires 70 crore vaccines and the reports that the vaccine effects expire in three months is true, then India would require 280 crore vaccines to be produced and distributed in a year.”
Companies looking to take advantage of the amendment will have to collaborate with institutions like the Indian Institute of Technology, and national labs under the Indian Council of Medical Research and other institutions mentioned in Schedule VII of the Companies Act.
Companies with net worth of Rs 500 crore or more, or a turnover of Rs 1,000 crore or more, or net profit of Rs 5 crore or more, are required to spend 2% of their average net profit of the preceding three years on CSR activities.