Cost Audit Rules – new thresholds

MCA has issued a notification dated 31st October, 2014 amending the threshold limits in maintaining of cost records and appointment of cost auditors. Accordingly the Companies (Cost Records and Audit) Rules, 2014 has been amended to that effect.

The gist of the amendments are that cost records to be maintained if the overall turnover from all its products and services during the immediately preceding financial year is Rs.35 crores or more. Cost Audit is mandatory for companies falling in Item A of Rule 3 of the aforesaid Rules when their total turnover from all products and services is Rs.50 crores or more and turnover for individual products or services is Rs.25 crores or more, both as per the immediately preceding financial year. In case of companies falling in Item B of Rule 3, the respective limits are Rs.100 crores and Rs.35 crores. Cost audit is not applicable where a company’s revenue from foreign exchange exceeds 70% of its total revenue or it is operating from a special economic zone.

Copy of the MCA notification can be found here http://www.mca.gov.in/Ministry/pdf/Amendment_Rules_01012014.pdf

Copy of the Original Rules can be found here http://www.mca.gov.in/Ministry/pdf/rules_2_30062014.pdf

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