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 ?

AI Summary

One-time ex-gratia payment to contractor during COVID-19 lockdown does not qualify as CSR expense under labor laws. A manufacturing company inquired whether a one-time ex-gratia payment made to a labor contractor during the COVID-19 lockdown qualifies as Corporate Social Responsibility (CSR) expenses. The payment was intended to assist the contractor's laborers, who are not on the company's payroll, and no wages were due since no work occurred during this period. The response clarified that such expenditure does not qualify as CSR, as the labor laws distinguish between temporary/casual/daily wage workers and contract labor. CSR expenses require explicit board declarations and auditor certification, applicable only to payments over and above wages for on-roll workers.