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Kerala Floods: Centre Agrees to Divert CSR Collections to CM Relief Fund

Earlier, the Centre had also allowed companies spending towards Kerala floods to count this toward their mandatory 2 percent spending on CSR initiatives under the Companies Act, 2013.

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Updated:August 30, 2018, 4:52 PM IST
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Kerala Floods: Centre Agrees to Divert CSR Collections to CM Relief Fund
PM Narendra Modi during a review meeting to take stock of the flood situation in Kochi on Aug 18. (PTI Photo)
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New Delhi: The ministry of corporate affairs, in an effort to help Kerala flood victims, has agreed to the proposal of diverting funds collected through companies’ spending on corporate social responsibility (CSR) to Kerala’s CM relief fund. This comes after Kerala state administration wrote to the Centre asking for additional funds.

Earlier, the Centre had also allowed companies spending towards Kerala floods to count this toward their mandatory 2 percent spending on CSR initiatives under the Companies Act, 2013. Under normal circumstances, disaster relief doesn't come under Schedule 7, Section 135 of the Companies Act that outlines CSR guidelines and the areas where expenditure could be made. However, drawing an exception, companies can club relief material under heads such as medical aid, sanitation and providing housing and shelter.

The Centre has communicated that companies willing to provide or already providing medical aid can account those as expenses towards promoting health care, including preventive health care. Food supply can be covered under eradicating hunger, poverty and malnutrition and supply of clean water can be covered under sanitation and making available safe drinking water.

Companies directly donating to the chief minister’s relief fund are already getting covered under the CSR provision of the Companies Act.

In India, around 14,000 companies are required to spend on various social projects under Section 135 of the Companies Act. As per law, a company must spend 2% of its profit on CSR from the current fiscal year if it has a turnover of Rs 1,000 crore or more, or net worth of Rs 500 crore or profit of Rs 5 crore and more. The ministry has provided a list of items under Schedule 7 that are covered under the law.

Heavy rains and unprecedented floods in the state this monsoon season have claimed more than 400 lives. Northward of 3 lakh people are still sheltered in relief centres.
| Edited by: Naqshib Nisar
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