MCA widens CSR for defence personnel
Measures for the CAPF and CMPF veterans and dependants now a part of CSR activity
Schedule VII of the Companies Act, 2013 (‘Act’) currently includes measures taken for the armed forces veterans, war widows and their dependants as one of the CSR activities. The Ministry of Corporate Affairs (“MCA”) vide its Notification dated 23rd June, 2020 has included contribution made towards the benefit of Central Armed Police Forces (CAPF) and Central Para Military Forces (CPMF) veterans and their dependents including widows, within the ambit of CSR.
MCA has issued several notifications either to clarify or broaden the ambit of Schedule VII. This Notification is yet another step taken by the MCA for widening the scope of CSR activities to include CAPF and CMPF veterans and their dependants and war widows.
This note tries to provide a quick coverage on the said amendment.
Difference between Armed Forces and CAPF/CPMF
|The term “armed forces” basically means – Indian Armed Forces which are the military forces of the Republic of India. It comprises three professional uniformed services :
1. The Indian Army
2. The Indian Navy
3. The Indian Air Force
|CAPF (Central Armed Police Force)  consists of :
1. Assam Rifles (AR);
2. Border Security Force (BSF);
3. Central Industrial Security Force (CISF);
4. Central Reserve Police Force (CRPF);
5. Indo Tibetan Border Police (ITBP);
6. National Security Guard (NSG); and
7. Sashastra Seema Bal (SSB)
|The nomenclature CAPF will be used uniformly for CPMF as per the Office Memorandum  issued by the Ministry of Home Affairs issued on March 18, 2011|
Current CSR spending pattern and changes expected due to the amendment
The current pattern for CSR spending for armed forces veterans, war widows and their dependants include contributions to several funds like:
1. Armed Forces Flag Day Fund (AFFDF)
2. Army Wives Welfare Association (AWWA)
3. The Army Welfare Fund Battle Casualties
Apart from donating to these funds, companies have also provided financial relief to the martyr’s families and have conducted workshops for the children of war widows as a part of their CSR projects.
Further, in addition to the above, contribution to “National Defence Fund” which is used for the welfare of the members of the Armed Forces (including Para Military Forces) should be eligible for being a CSR activity.
As a result of the enhanced scope for CSR spending for CAPF/ CAMF, contribution to the fund“Bharat Ke Veer Corpus Fund”, which was previously not eligible for CSR considering the fact that it specifically benefits CAPF, will now be covered as per the amendment. Accordingly, any contribution to this fund will now qualify as a CSR activity.
High Level Committee on CSR
MCA had constituteda High Level Committee(HLC) on CSR in February, 2015 under the Chairmanship of Secretary (Corporate Affairs) to review the existing CSR framework and formulate a coherent policy on CSR and further make recommendations on strengthening the CSR ecosystem, including monitoring implementation and evaluation of outcomes.Later, the HLC on CSR was re-constituted in November, 2018. The scope of HLC was widened to include recommendation of guidelines for enforcement of CSR provisions. Thoughthe Report discussed on amending Schedule VII in line with promoting sports, senior citizens’ welfare, welfare of differently abled persons, disaster management, and heritage, however, it did not consider widening the clause relating to the scope of armed forces in the Schedule.
Further, as evident from the data given in the HLC Committee Report, CSR expenditure made on armed force veterans, war widows/ dependents have seen an upward trend over the years, however it forms a very small proportion of the total CSR expenditure made.
The service spirit of CAPF is no less than that of the Indian Army. Acknowledging this fact MCA has brought this amendment. While all the areas for CSR are extremely important for the overall socio-economic welfare and development, the measures taken for the benefit of veterans and dependants of the armed forces and CAPF/ CPMF is an extremely noble activity.
 Office Memorandum can be viewed here – https://web.archive.org/web/20160117183848/http:/www.mha.nic.in/sites/upload_files/mha/files/OM2-020513.pdf
 The Army Welfare Fund Battle Causalities
(Author Ankit Vashishthis associated as an Executive with Vinod Kothari and Company and he can be reached at firstname.lastname@example.org)