CSR EXPENSES

[CABIJENDERKUMAR BANSAL]

My client is a manufacturing company. There is a labour contractor who provides labour to company on per piece basis i.e. labour is not on roll of the company.

Company has paid one time ex-gratia payment to a labour contractor as covid assistance to help his labour during lockdown time. But there was no payment for work done in this period since no manufacturing activity was going on.

As per ROC's FAQ on COVID related CSR expenses, Ex-gratia payment to temporary/casual/daily wage workers over and above the disbursement of wages shall be admissible as CSR expenses.

But in this case, assistance is not to on roll workers/daily worker / causal workers but to contractor and it is not over and above the disbursement of wages, as payment was not due at all.

Will it be considered as CSR expenses ?

[YAGAY andSUN]

In our view such expenditure will not qualify as CSR expenditure as definition of temporary /casual /daily wage and the contract labour are different in labour laws, Industrial Dispute Act and factory act.

7.Whether payment of exgratia to temporary /casual /daily wage workers shall qualify as CSR expenditure?
If any ex-gratia payment is made to temporary /casual workers/ daily wage workers over and above the disbursement of wages, specifically for the purpose of fighting COVID 19, the same shall be admissible towards CSR expenditure as a onetime exception provided there is an explicit declaration to that effect by the Board of the company, which is duly certified by the statutory auditor.

AI Summary

CSR eligibility: ex gratia to contractor paid labour does not qualify absent payment over and above wages and board declaration. A one time ex gratia paid to a labour contractor when no wages were due will not qualify as CSR expenditure because contract labour is distinct from temporary/casual/daily wage workers; ROC allows COVID ex gratia as CSR only if paid over and above wages to such workers, accompanied by an explicit board declaration and statutory auditor certification.