> **Legal basis:** Companies Act, 2013 — Section 148, read with the Companies (Cost Records and Audit) Rules, 2014 (Rules 3–6), as amended by G.S.R. 695(E) (14 July 2016), G.S.R. 1157(E) (3 December 2018) and the Companies (Cost Records and Audit) Amendment Rules, 2025 (G.S.R. 361(E), 30 May 2025, in force 14 July 2025). Corporate Laws (Amendment) Bill, 2026 status per PRS Legislative Research, checked 27 October 2026.

Cost audit in India does not stand or fall with the Corporate Laws (Amendment) Bill, 2026. The obligations that apply to covered companies today come from Section 148 of the Companies Act, 2013 and the Companies (Cost Records and Audit) Rules, 2014 — an appointment clock, a report clock and a filing clock that companies must run for every financial year. The Bill is a proposal that has neither passed nor been enacted into law, so this article states what the current law requires and reports only the verified status of that proposal.

## Who Must Maintain Cost Records and Appoint a Cost Auditor?

Section 148(1) of the Companies Act, 2013 empowers the Central Government to direct prescribed classes of companies engaged in the production of goods or providing services to include prescribed cost particulars in their books of account (Section 148(1), Companies Act, 2013); Section 148(2) lets it direct an audit of the cost records of companies so covered, with a prescribed net worth or turnover, conducted as specified (Section 148(2), Companies Act, 2013). The audit is conducted by a cost accountant appointed by the Board, and a person appointed under Section 139 as the company's statutory auditor cannot conduct it (Section 148(3) and its first proviso, Companies Act, 2013).

The Companies (Cost Records and Audit) Rules, 2014 spell out the covered classes in Rule 3 and the cost-audit thresholds in Rule 4. Rule 3 requires cost records for its class of covered companies, "including Foreign Companies defined in sub-section (42) of section 2 of the Act" (Rule 3, Companies (Cost Records and Audit) Rules, 2014) "(Rule 3, as originally notified — check current thresholds)" — its Tables cover regulated-sector items, among them telecommunication services (TRAI), electricity, petroleum products under the PNGRB, **drugs and pharmaceuticals**, **fertilisers** and **sugar and industrial alcohol**, and non-regulated-sector items, among them **iron and steel**, rubber and allied products, **cement**, ores and mineral products, base metals, the **construction industry**, **health services**, **education services**, textile products and named medical devices. Cost audit then triggers under Rule 4, as originally notified: "In the case of a multi-product or a multi services company specified in sub-clause (b) of clause (B) and sub-clause (b) of clause (C) of rule 3, the requirement for cost audit shall apply to a product or a service for which the individual turnover (from such specific product or such specific service) is rupees one hundred crore or more" (Rule 4(2), Companies (Cost Records and Audit) Rules, 2014), and "In the case of a company producing any one specific product or service specified in sub-clause (b) of clause (B) and sub-clause (b) of clause (C) of rule 3, the requirement for cost audit shall apply if the net worth of the company is rupees five hundred crore or more or the turnover from such product or such service is rupees one hundred crore or more" (Rule 4(3), Companies (Cost Records and Audit) Rules, 2014) — (Rule 4, as originally notified — check current thresholds). Cost records are maintained in Form CRA-1 under Rule 5(1) (Companies (Cost Records and Audit) Rules, 2014).

<!-- ORIGINAL_GRAPHIC
url: /graphics/cost-audit-threshold-decision-tree-2026.png
alt: Decision tree showing the two-step test for cost audit applicability under the Companies (Cost Records and Audit) Rules 2014 — first whether the company falls in a Rule 3 item, then whether the Rule 4 cost-audit conditions are met, with the Rule 4 figures quoted as originally notified and a note to check current thresholds
caption: Applicability is a two-step test under Rules 3 and 4 of the Companies (Cost Records and Audit) Rules 2014 — covered class first, then the Rule 4 conditions
brief: Decision-tree flowchart in Oxford blue and white. Step 1 diamond: Does the company fall in a Rule 3 item (a notified sector in the Companies (Cost Records and Audit) Rules 2014)? NO arrow leads to Cost records not directed under the Rules. YES arrow leads to Step 2 diamond: Are the Rule 4 cost-audit conditions met? NO leads to Cost records required, no cost audit. YES leads to Cost audit mandatory — appoint a cost auditor within 180 days of the start of the financial year (Rule 6(1)) and file Form CRA-2 within 30 days of the Board meeting or by that 180th day, whichever is earlier (Rule 6(2)). No invented rupee figures anywhere. Brand mood Oxford blue, crimson accents. No real company names or logos.
-->

## The CRA Timeline That Applies Today

| Form | Purpose | Rule and clock |
|---|---|---|
| **CRA-2** | Notice of appointment of the cost auditor, filed by the company with the Central Government | Board appoints the cost auditor within 180 days of the commencement of every financial year (Rule 6(1), Companies (Cost Records and Audit) Rules, 2014); the CRA-2 notice is due **within 30 days of the Board meeting that made the appointment or within 180 days of the commencement of the financial year, whichever is earlier** (Rule 6(2), Companies (Cost Records and Audit) Rules, 2014). For FY 2025-26 the outer date was September 27, 2025; for FY 2026-27 it is September 27, 2026, unless the Board-meeting clock ends earlier. |
| **CRA-3** | Cost audit report forwarded by the cost auditor to the Board | Within 180 days from the closure of the financial year (Rule 6(5) as substituted by G.S.R. 695(E), 14 July 2016); the Board shall consider and examine the report, particularly any reservation or qualification in it. No fixed calendar date — the clock runs from the year's closure. |
| **CRA-4** | Company's filing of the cost audit report with the Central Government | Within 30 days **from the date of receipt of a copy of the cost audit report**, in XBRL format, with the prescribed fee (Rule 6(6) as substituted by G.S.R. 695(E), 14 July 2016; same term in Section 148(6), Companies Act, 2013). Where the company has an AGM extension under Section 96(1), G.S.R. 1157(E) allows filing "within resultant extended period of filing financial statements under section 137" (G.S.R. 1157(E), 3 December 2018). No fixed calendar date — the clock starts on receipt. |

Forms matter too: G.S.R. 361(E), 30 May 2025, in force 14 July 2025, substituted Forms CRA-2 and CRA-4 (Companies (Cost Records and Audit) Amendment Rules, 2025). The revised CRA-2 asks for the date of the Board meeting at which the cost auditor was appointed and confirmation of the auditor's written consent and Rule 6(1A) certificate. The amendment substituted the forms only — it changed no deadline.

## Penalties Under Current Law

Section 148(8) of the Companies Act, 2013 prescribes the consequence of default: "(a) the company and every officer of the company who is in default shall be punishable in the manner as provided in sub-section (1) of section 147; (b) the cost auditor of the company who is in default shall be punishable in the manner as provided in sub-sections (2) to (4) of section 147" (Section 148(8), Companies Act, 2013). Section 147(1), quoted verbatim, sets the fine for the company at "not less than twenty-five thousand rupees but … five lakh rupees" — i.e. ₹25,000 to ₹5,00,000 — and for every officer in default at "not less than ten thousand rupees but … one lakh rupees" — i.e. ₹10,000 to ₹1,00,000 (Section 147(1), Companies Act, 2013). For the cost auditor in default, punishment runs as provided in Section 147(2)–(4) (Section 148(8), Companies Act, 2013).

## Where the Corporate Laws (Amendment) Bill Stands

The Corporate Laws (Amendment) Bill, 2026 was introduced in the Lok Sabha on 23 March 2026 and referred to a Joint Parliamentary Committee the same day; the JPC's report is dated 3 August 2026; the Bill has not been passed (PRS Legislative Research bill tracker, checked 27 October 2026). The Bill's text is with the Joint Parliamentary Committee; this article does not describe its clauses. Until the Bill is passed and enacted, the law in the sections above is the law that applies.

## Frequently Asked Questions

**Q: Is the Corporate Laws Amendment Bill 2026 already in force?**
A: No. The Bill was introduced in the Lok Sabha on 23 March 2026 and referred to a Joint Parliamentary Committee the same day; the JPC report is dated 3 August 2026; the Bill has not been passed (PRS Legislative Research, checked 27 October 2026). The Companies Act 2013 read with the Rules applies.

**Q: What is the CRA-2 deadline for FY 2025-26 — and for the current year?**
A: Rule 6(2) gives two clocks: 30 days from the Board meeting that appointed the cost auditor, or 180 days from the commencement of the financial year, whichever is earlier (Rule 6(2), Companies (Cost Records and Audit) Rules, 2014). For FY 2025-26 the outer date was September 27, 2025; for FY 2026-27 it is September 27, 2026.

**Q: Our company is in services only. Does cost audit apply?**
A: Yes for the specified service businesses: telecommunication services (TRAI) and electricity sit among the notified regulated-sector items, port services and aeronautical services, health services and education services are notified items too (Rule 3, Companies (Cost Records and Audit) Rules, 2014). Coverage still depends on the Rule 3 requirements and the Rule 4 conditions — verify your classification with a cost accountant.

**Q: We fit a Rule 3 sector, but our turnover for that product is small. Do we need a cost auditor?**
A: Cost audit triggers on the Rule 4 conditions, quoted above as originally notified — check current thresholds: a multi-product company needs the product or service's individual turnover at the notified figure or more, a single product or service otherwise turns on net worth or turnover (Rule 4(2)–(4), Companies (Cost Records and Audit) Rules, 2014). A product or service below those levels carries no cost audit for it, though cost records may still apply under Rule 3.

**Q: What happens if we miss the CRA-2 or CRA-4 deadline?**
A: Section 148(8) routes the default to the Section 147 penalties for the company, its officers in default and the cost auditor (Companies Act, 2013), with the amounts quoted above.

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*Disclaimer: This article is for educational purposes only and does not constitute legal, regulatory, or professional advice. The Corporate Laws (Amendment) Bill 2026 has not been passed — verify current status from the PRS Legislative Research bill tracker and mca.gov.in. Consult a qualified cost accountant or Chartered Accountant for company-specific guidance.*

*Harun Raaj & Associates provides [cost audit compliance services](https://www.harunraaj.com/services/cost-audit-compliance) and [virtual CFO services](https://www.harunraaj.com/services/virtual-cfo) to mid-size Indian companies navigating cost records and audit requirements.*

I'm CA Harun Raaj, Visakhapatnam. If your company is above the cost records and audit thresholds and has any CRA-2, CRA-3 or CRA-4 gap for FY 2025-26 or FY 2026-27, reach out and we'll help you close it in the right order.

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## See Also

- [Standard Costing for Manufacturers: Bridging Product Costs and Transfer Pricing Under Section 92C](https://www.harunraaj.com/blog/standard-costing-transfer-pricing-section-92c-form-3ceb)
- [DPCO Compliance for Pharma: Cost Statement Format, Ceiling Price Reporting & NPPA Rules](https://www.harunraaj.com/blog/dpco-compliance-pharmaceutical-companies-nppa-ceiling-price)
- [Stock Audit for Bank Borrowers: RBI Guidelines, Ind AS 2 Valuation, and LFAR Findings](https://www.harunraaj.com/blog/stock-audit-bank-borrowers-rbi-guidelines-inventory-valuation)

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