Some companies have to keep cost records, and some of those must also have them audited by a Cost Accountant in practice. This page sets out who is covered, what has to be filed, and when.
Two separate requirements
Cost records
A company in a listed industry keeps cost records once its overall turnover in the previous year was ₹35 crore or more.
- Applies to companies, including foreign companies, making listed products or providing listed services
- Records are kept in , for each listed product or service
- Micro and small enterprises are outside the rule
Cost audit
A company that keeps cost records needs a cost audit only when it also crosses two further limits.
- Regulated sectors (Table A): overall turnover ₹50 crore or more, and ₹25 crore or more from the listed product or service
- Other sectors (Table B): overall turnover ₹100 crore or more, and ₹35 crore or more from the listed product or service
- Both limits are tested on the previous financial year
Who is exempt from cost audit
Three kinds of company keep cost records but need no cost audit.
- Companies whose revenue from exports in foreign exchange is above 75% of total revenue
- Companies operating from a special economic zone
- Companies generating electricity for captive use through a captive generating plant
Who is covered: points to check
- Table A lists regulated sectors, such as telecommunications, electricity, petroleum products, drugs and pharmaceuticals, fertilisers, and sugar and industrial alcohol.
- Table B lists non-regulated sectors: specified manufacturing and service activities including iron and steel, cement, chemicals, textiles, electrical and mechanical machinery, health services and several other categories.
- The exact description in the rules and the tariff heading of each product matter. A broad description such as “manufacturing company” is not enough by itself.
- Ordinary trading is generally not covered, except for the specified medical devices.
- A medium enterprise is not excluded merely because it is an MSME. Only micro and small enterprises are outside the rule.
- Where a company has products in both tables, covered turnover from both tables is added together, following the Revised FAQs, 2024 of the Institute of Cost Accountants of India (ICMAI). The overall-turnover limit decides which table's products are audited.
- An exemption from cost audit does not remove the requirement to keep cost records.
The article on cost records and cost audit works through examples, including a company with products in both tables.
The forms and the dates
| Step | Form | When |
|---|---|---|
| The Board appoints the cost auditor | None | Within 180 days of the start of the financial year (by 27 September) |
| The company tells the Central Government | CRA-2 | Within 30 days of the Board meeting, or 180 days of the start of the year, whichever is earlier |
| The cost auditor reports to the Board | CRA-3 | Within 180 days of the end of the financial year (by 27 September) |
| The company files the report | CRA-4, in XBRL (a machine-readable filing format) | Within 30 days of receiving the report |
A vacancy in the office of cost auditor is filled by the Board within 30 days. Forms and were replaced with new versions from 14 July 2025; the limits and dates did not change.
Who can be the cost auditor
- A Cost Accountant in practice, or a firm of Cost Accountants, appointed by the Board.
- The company's statutory auditor cannot also be its cost auditor.
- The qualifications and disqualifications that apply to statutory auditors apply here too, as far as they are relevant.
- The audit committee recommends the remuneration, the Board approves it and the shareholders ratify it.
If a company does not comply
A company that fails to keep cost records or have the audit done can be fined, and so can each officer in default (Section 148(8) read with Section 147).
| Who is fined | Minimum | Maximum |
|---|---|---|
| The company | ₹25,000 | ₹5 lakh |
| Each officer in default | ₹10,000 | ₹1 lakh |
What the rules do not cover
The rules apply only to companies. Partnership firms, LLPs, trusts, societies and proprietorships are outside them. The costing itself is useful to any business for pricing and decisions, whether or not the rules apply.
The Cost Audit Applicability Checker works through the tests for your company.
Do the Cost Accounting Standards apply if we are not covered by cost audit?
They apply directly where cost records are required, because Form CRA-1 requires records to follow the Cost Accounting Standards and . The Institute of Cost Accountants of India (ICMAI) has issued 25 standards, along with GACAP and 13 guidance notes. Even where they are not mandatory, they give a consistent basis for measuring cost, which makes comparison across periods meaningful.
Laws and standards
- Section 148 of the Companies Act, 2013 and the Companies (Cost Records and Audit) Rules, 2014, as amended to 2025.
- Companies (Cost Records and Audit) Rules, 2014; Cost Accounting Standards (CAS) and Generally Accepted Cost Accounting Principles (GACAP)
The limits and forms are changed by notification of the Ministry of Corporate Affairs.
This page describes the law for information. Whether the rules apply to a company depends on the tariff heading of each product, its turnover and its exemptions.
