R&D for treating Covid-19 by pharmaceutical firms part of CSR activities

Activities undertaken by companies in normal course of business also part of CSR

The government has allowed research and development (R&D) activities related to new vaccines, drugs or medical devices related to Covid-19 for 2020-21 to 2022-23 to be included in corporate social responsibility (CSR) activities. However, this will be allowed for only those companies which are engaged in R&D of new vaccines, drugs or medical devices in the normal course of business.
 

This will also be allowed if funds are spent in collaboration with permitted institutions listed in the Entry IX of the schedule of VII of the Companies Act. These institutions include universities, Indian Institutes of Technology (IITs) among others.
 

Sandeep Jhunjhunwala, partner at Nangia Andersen, said the initiative will boost the funding for developing Covid-19 vaccines or drugs domestically.
 

The new rules have omitted the words "excluding activities undertaken in pursuance of its normal course of business," said Jhunjhunwala. This means that activities undertaken by companies in the normal course of its business would also qualify as CSR spend.
 

For instance, if a company engaged in sports shoe business promotes IPL, it could now include this expense as CSR. This was not the case earlier, explained Jhunjhunwala.