Cost Audit 2025 for Detergent & Soap Manufacturers

Cost Audit Applicability for Detergent & Soap Manufacturers: What Changed in 2025

Cost audit has long been a crucial compliance requirement for Indian manufacturers, particularly those in regulated sectors like pharmaceuticals, FMCG, chemicals, and power. Introduced under the Companies (Cost Records and Audit) Rules, 2014, this regulation mandates eligible companies to maintain detailed cost records and undergo an independent audit of their cost accounts by a qualified cost auditor. The rules are framed under Section 148 of the Companies Act, 2013, and are enforced by the Ministry of Corporate Affairs (MCA).

What is Cost Audit and Why It Matters?

A cost audit is not just another layer of compliance; it is a strategic process to verify and ensure that companies are maintaining cost records as prescribed. It checks the correctness of cost accounting records and ensures that costs are being recorded, analyzed, and reported transparently. The primary objective is to control cost inefficiencies, aid price control, and ensure accurate reporting to regulators, shareholders, and consumers.

Unlike a statutory audit, which focuses on financials, a cost audit drills down into the unit-wise cost elements, production capacity, material consumption, and overhead absorption. For detergent and soap manufacturers, this means meticulous tracking of raw materials like surfactants, perfumes, alkalis, fillers, and packaging costs, alongside manufacturing, distribution, and R&D expenses.

Why FMCG Companies, Especially Detergent & Soap Manufacturers, Should Care

India’s FMCG sector, especially companies producing personal care and home hygiene products like soaps, detergents, and cleaning agents, has witnessed massive growth post-COVID. Increased demand, pricing pressures, and supply chain disruptions have made cost transparency more critical than ever. For companies in this sector, cost audit compliance is no longer optional but essential for survival and competitiveness.

In 2025, changes in turnover thresholds and classification norms under the cost audit framework are expected to bring many mid-sized FMCG players—especially those manufacturing detergents and soaps—within the audit net.

What Changed in 2025?

The Ministry of Corporate Affairs has made updates to cost audit applicability rules for FY 2024–25, impacting several industries including detergent and soap manufacturing. These updates are not only about numbers—they affect who needs to file CRA forms, maintain cost records, and appoint cost auditors. Manufacturers that earlier flew under the radar due to lower turnover or unclear classification now fall under mandatory cost audit, especially if they meet the revised thresholds or fall under specified product categories in Table A or B.

Cost Audit Applicability in 2025: What’s New?

Cost audit requirements are determined by the industry classification (as per Table A or Table B under the 2014 Rules) and company-specific financial parameters, such as overall turnover and aggregate turnover of specific products/services.

Recent MCA Updates in 2025: What You Need to Know

As of the latest circulars and notifications released by the Ministry of Corporate Affairs (MCA) in Q1 2025, a few significant changes have been introduced:

Refined Industry Classification:
- The MCA has revised several CETA (Central Excise Tariff Act) headings and HS codes to better reflect current manufacturing trends.
- The soap and detergent segment, earlier ambiguously classified under broader chemical categories, is now clearly defined under Table B, which covers companies engaged in regulated sectors and consumer goods.
Updated Turnover Thresholds:
- Under the 2025 notification, cost audit is applicable to all companies engaged in manufacturing of goods covered under Table B if:
  - The overall turnover (from all products and services) during the preceding financial year is ₹100 crore or more, AND
  - The turnover from individual Table B products (like soaps, detergents, washing powders) is ₹25 crore or more.

✅ Example: If your detergent unit had ₹120 crore overall turnover and ₹28 crore turnover from soap bars and washing powders in FY 2024–25, you must appoint a cost auditor and maintain CRA records for FY 2025–26.

Exporters & Multibrand Manufacturers Now Included:
- Previously, exporters or brands manufacturing across segments (personal care, laundry, dish wash, etc.) could avoid cost audit if one product line fell below the threshold.
- Now, the aggregate value of covered products (soaps + detergents + household cleaning) will be clubbed to determine the ₹25 crore threshold for Table B products.
Digital Filing Enforcement Tightened:
- Filing of CRA-2 (appointment of cost auditor) and CRA-4 (submission of cost audit report) must be done strictly through MCA V3 portal.
- Delayed submissions will attract penalties, and in some cases, lead to disqualification warnings for company directors under Section 164 of the Companies Act.

Changes to Table A and Table B: FMCG Firms Must Re-Evaluate

For detergent and soap manufacturers, understanding the classification under Table A or Table B is crucial:

Table A generally includes companies in regulated industries like petroleum, telecom, and mining.
Table B, where most FMCG products fall, includes:
- Toilet soaps and bath products
- Laundry soaps and detergents
- Household cleaners
- Dishwash bars and liquids

As of 2025, the soap and detergent industry is unequivocally placed under Table B, thereby triggering mandatory cost audit if turnover conditions are met. This classification eliminates the ambiguity that previously existed for companies producing multiple home-care products.

📌 Pro Tip for Soap Manufacturers:

If you're manufacturing both branded and non-branded soap or detergent products, both must be included in turnover calculation. Whether you're supplying to wholesalers, selling under white-label agreements, or operating B2C D2C models — the cost audit requirement is based on manufacturing activity, not just end-use branding.

✅ Final Thoughts on 2025 Changes

For detergent and soap manufacturers, 2025 marks a crucial shift in compliance obligations. The revised cost audit applicability thresholds, clarified product classifications, and stricter enforcement mean companies that were earlier non-compliant or borderline now need to reassess their eligibility.

Failure to act could result in penalties, disrupted statutory audit processes, and negative investor perception.

Industry Classification: Where Do Detergents & Soaps Fall?

In 2025, understanding how cost audit applicability works begins with proper industry classification. Detergent and soap manufacturers in India fall under specific categories laid out in the Companies (Cost Records and Audit) Rules, 2014, and this classification determines whether your business is subject to mandatory cost audit.

Table A or Table B: Where Do Detergents & Soaps Belong?

Under the cost audit framework, industries are broadly divided into two tables:

Table A: Regulated sectors like power, telecom, and petroleum.
Table B: Non-regulated sectors, which include most FMCG manufacturers, including detergents and soaps.

According to the latest MCA notifications, soap and detergent manufacturing falls under Table B, which means that the cost audit is applicable based on specific turnover and net worth conditions (discussed in the next section).

Manufacturers in this space must review whether their product classification aligns with cost audit codes because many brands now deal in multi-category FMCG goods—some of which may or may not fall under the cost audit mandate.

CETA Codes & HS Codes: Why They Matter

If you're unsure whether your product is classified correctly, the Central Excise Tariff Act (CETA) and Harmonized System (HS) codes offer clarity.

Detergents and soaps typically fall under CETA Chapter 34, especially 3401 and 3402, depending on their composition and use.
HS Codes (for global classification) also help determine the regulatory treatment of export-based manufacturers.

Many Indian companies manufacture both detergent cakes, liquid soaps, and cleaning agents, so knowing the exact sub-classification is vital.

Here's an example:

HS Code 3401.11: Soap for toilet use (in bar form)
HS Code 3402.20: Cleaning agents used in households and industries

If your company's core products fall under these categories and meet turnover conditions, cost audit automatically becomes mandatory.

Branded vs. Unbranded Product Classification

One of the key differentiators in cost audit classification is branded vs. unbranded goods:

Branded detergent and soap manufacturers: These generally have a higher turnover and national distribution, and are directly under MCA’s radar for cost audit.
Unbranded/local manufacturers: Although they fall under Table B, they might escape audit if their revenue and net worth don’t breach the threshold.

That said, several regional brands are scaling rapidly and crossing cost audit thresholds unknowingly. This puts them at risk of non-compliance penalties.

In 2025, even some online-only D2C soap brands are hitting cost audit thresholds due to the rise of e-commerce—making classification and cost record maintenance more critical than ever.

Turnover & Net Worth Criteria for Cost Audit (2025 Thresholds)

Once you identify your industry classification, the next step is to check financial thresholds for cost audit applicability. As per the latest MCA rules for 2025, companies under Table B (including detergent and soap manufacturing) must comply with cost audit requirements if they meet the following conditions.

Turnover Threshold (Product-specific & Total)

As per Rule 4 of the Companies (Cost Records and Audit) Rules, 2014:

Cost audit is applicable to companies covered under Table B if:

The overall annual turnover from all products/services is ₹100 crore or more, and

The turnover of individual products/services for which cost audit is applicable is ₹35 crore or more.

Example:

If your detergent company manufactures both:

Household cleaning agents (₹80 crore revenue)
Soap bars (₹38 crore revenue)

And your total turnover is ₹118 crore, cost audit becomes mandatory because:

You're in Table B
Total turnover exceeds ₹100 crore
Product-specific turnover (soap) exceeds ₹35 crore

Domestic vs. Export Turnover

One commonly misunderstood point in cost audit applicability is how exports are counted. The good news: both domestic and export turnover are included when calculating thresholds.

So, if your company exports soap bars to Europe worth ₹40 crore and sells ₹70 crore domestically, your total turnover is ₹110 crore. Even if your operations are largely international, you must still comply with Indian cost audit rules if your company is registered in India.

Net Worth Criteria

While the turnover threshold is the primary trigger, cost audit may also apply if the company’s net worth exceeds ₹500 crore. In such cases, the MCA may demand enhanced reporting and detailed cost records irrespective of specific product-wise turnover.

This ensures even high-value companies with diversified operations, including detergents, cosmetics, cleaning agents, etc., maintain transparency and cost accountability.

Combined Operations: When All Business Verticals Count

Detergent companies often manufacture other FMCG products like:

Dishwashing gels
Fabric softeners
Disinfectants
Personal hygiene products

If these combined verticals push your turnover beyond ₹100 crore, and any of them individually crosses ₹35 crore, the company becomes eligible for cost audit under Table B.

Real-World Example: Disha Homecare Pvt. Ltd.

Let’s consider a fictional example based on real-world patterns.

Disha Homecare Pvt. Ltd.:

Turnover from soap (branded): ₹42 crore
Turnover from detergent powder: ₹48 crore
Turnover from disinfectant sprays: ₹22 crore
Total turnover: ₹112 crore

Since the company is manufacturing multiple Table B products, and at least two products cross ₹35 crore, they must:

Maintain cost records as per CRA-1
Appoint a cost auditor using CRA-2
File audit report via CRA-3
Submit final filing through CRA-4

Key Cost Records to Maintain for Detergent & Soap Manufacturers

Under the Companies (Cost Records and Audit) Rules, 2014, detergent and soap manufacturers—especially those in the FMCG sector—must maintain detailed cost records as per CRA-1 guidelines. These records ensure cost transparency, accurate reporting, and regulatory compliance for businesses that cross the audit applicability threshold. Let’s break down the cost components that detergent and soap companies must document for FY 2024–25.

📌 Raw Material Costs

For detergent and soap production, raw materials constitute a significant chunk of the cost structure. The key ingredients include:

Fatty acids and oils (like palm oil, tallow)
Surfactants (like LABSA, SLES)
Builders (soda ash, STPP)
Additives (enzymes, fragrances, colorants)

Each of these must be recorded with quantity, rate, supplier details, freight cost, and procurement terms. This helps in identifying cost control opportunities and aids auditors in verifying material efficiency.

📦 Packaging Costs

Packaging is crucial in the FMCG industry. Whether you manufacture toilet soaps, detergent bars, powders, or liquid detergents, packaging plays a vital brand and operational role. Costs include:

Primary packaging: wrappers, bottles, cartons
Secondary packaging: boxes, shrink wraps
Printing and labeling charges

CRA-1 mandates detailed break-up of packaging material usage and cost per unit of output.

⚙️ Utilities and Fuel

Production processes like saponification, mixing, drying, and blending are energy-intensive. Companies need to maintain:

Boiler and electricity consumption logs
Furnace oil, steam, gas or diesel usage
Power consumption per product unit

This is particularly important if energy efficiency or sustainability reports are to be prepared alongside the cost audit.

👷 Wages and Salaries

A cost sheet must include direct labor (machine operators, supervisors) and indirect labor (maintenance staff, quality control, warehousing). Salaries, wages, bonus, gratuity, and allowances are to be split per process or cost center.

🏭 Overheads and Administrative Costs

Overheads in detergent and soap production include:

Rent, rates, repairs
IT and ERP software licenses
Admin staff salaries
Security, cleaning, depreciation

Under CRA-1, these overheads should be allocated process-wise, helping in margin and profitability analysis for each product line.

🧼 Multiple Product Line Treatment

Many manufacturers produce toilet soaps, detergent bars, liquids, and washing powders under one roof. CRA-1 requires cost segregation by product type, which involves:

Independent material consumption records
Utility breakup by machine/product
Shared cost allocation based on units produced or machine hours

Auditors will specifically check for unjustified cost allocations or inflated overhead absorption.

📄 CRA-1 Requirements for 2025

For detergent and soap companies, CRA-1 compliance involves:

Detailed quantitative records of materials, utilities, and labor
Records of abnormal loss, scrap, and reprocessing
Monthly cost sheets and reconciliation with financials
Inventory movement (raw, WIP, finished goods)

Maintaining CRA-1-compliant cost records reduces audit time, minimizes error penalties, and ensures smooth CRA-3 reporting later in the cycle.

Cost Audit Filing Forms and Timeline (CRA-1 to CRA-4)

After maintaining proper cost records, detergent and soap manufacturers must follow a structured cost audit filing process with the Ministry of Corporate Affairs (MCA). The cost audit cycle involves four core forms:

📘 CRA-1: Maintain Cost Records

CRA-1 isn’t a form that needs to be filed online—it’s the format prescribed by MCA for maintaining cost records. These records must be kept up-to-date throughout the financial year and retained for a minimum of 8 years.

🧾 CRA-2: Appointment of Cost Auditor

What it does: This e-form notifies the MCA about the appointment of a cost auditor.
Who files it: The company, within 180 days from the start of the financial year (i.e., by September 27, 2024, for FY 2024–25).
Penalty for delay: ₹25,000 on the company + ₹10,000–₹1 lakh on officers.

Failing to appoint a cost auditor can also invalidate subsequent audit submissions and attract compliance red flags during inspections.

📋 CRA-3: Cost Audit Report Filing

Prepared by: The appointed cost auditor
What it contains: Part-wise cost data, profitability analysis, process-wise cost breakdown, and cost accountant’s observations.
Deadline: Within 180 days from the end of the financial year (i.e., September 27, 2025 for FY 2024–25).
Filing mode: XML-based upload + attachments (signed report, annexures).

Non-filing of CRA-3 attracts monetary penalties and can lead to audit disqualification issues.

📤 CRA-4: Filing Report with MCA

What it does: Submits the CRA-3 audit report officially to the MCA.
Filed by: The company, within 30 days of receiving the final audit report from the cost auditor.
Late filing penalties:
- ₹100 per day (no upper cap)
- May delay ITR filing and other statutory compliance

⏳ Updated CRA Filing Deadlines for FY 2024–25

Form	Description	Deadline
CRA-2	Cost Auditor Appointment	180 days from FY start – 27 Sep 2024
CRA-3	Cost Audit Report Submission	180 days from FY end – 27 Sep 2025
CRA-4	Filing Cost Audit Report with MCA	30 days from CRA-3 submission

✅ Don’t Miss the Filing Train!

In the FMCG industry, delays in cost audit filing can affect GST reconciliation, ITR submission, and even investor confidence. CRA-1 to CRA-4 should be part of your financial year close checklist, especially if you're manufacturing at scale or exporting.

With detergent and soap companies now firmly within cost audit purview for FY 2024–25, it’s wise to prepare early. SSCOIndia can help you maintain CRA-1 records, appoint auditors via CRA-2, and ensure CRA-3/CRA-4 compliance—while also syncing your cost data with ITR and GST filings.

Penalties for Non-Compliance in FMCG Sector

When it comes to cost audit compliance, detergent and soap manufacturers in India cannot afford to ignore the filing obligations under the Companies (Cost Records and Audit) Rules, 2014. For FY 2024–25, the Ministry of Corporate Affairs (MCA) has kept a sharp eye on cost audit delays, especially in the FMCG sector.

💼 Penalties for Non-Filing of CRA-3 or CRA-4

If your company fails to file CRA-3 (Cost Audit Report) or CRA-4 (XBRL submission to MCA) on time, here’s what you’re risking:

Company Penalty: As per Section 148 and 450 of the Companies Act, 2013, a penalty of ₹25,000 to ₹5,00,000 can be imposed on the company.
Cost Auditor Penalty: The cost auditor can face a fine up to ₹50,000 or more depending on the delay and negligence.

With these heavy fines, compliance isn't optional—it’s urgent.

📊 Impact on Statutory Audits & Board Approvals

Missing CRA deadlines doesn't just cost you money—it also delays:

Finalization of financial statements
Board of Directors' approvals
Annual General Meeting (AGM) timelines
Tax computation accuracy

Plus, auditors may raise red flags, and this can complicate your company’s financial audit cycle and statutory reporting.

🔍 Risk of GST Mismatches & Investor Concerns

Non-filing or misreporting in CRA reports often results in mismatches between:

Cost records vs. GST filings
Input tax credit vs. actual input usage
Declared profit vs. actual margins

These mismatches can trigger GST audit notices, delay refunds, or even invite investor scrutiny, especially if you're a listed or PE-backed company. For detergent and soap manufacturers, staying audit-ready is not just good governance—it’s survival.

Why SSCOIndia is the Right Choice for Detergent Industry Audit

When it comes to cost audit services in India, SSCOIndia stands out as a trusted partner for FMCG manufacturers, particularly in the detergent, soap, and cosmetic segments.

🧼 Industry Expertise: Focused on Detergents, Soaps & FMCG

Our cost audit team has deep experience working with:

Soap and detergent brands (branded/unbranded)
Personal care and cosmetic manufacturers
Cleaning product exporters
Contract manufacturers and OEM suppliers

We understand industry-specific cost drivers like surfactants, perfume compounds, fillers, fatty acids, and the critical role of packaging and branding expenses.

⚙️ End-to-End CRA Compliance Support

Our services cover the full cost audit cycle, including:

Preparation and maintenance of CRA-1 cost records
Filing CRA-2 for timely auditor appointment
Drafting and submitting CRA-3 with all annexures
CRA-4 XBRL filing with MCA portal

We also provide audit-ready formats that sync with your GST returns and ITR filings—avoiding discrepancies and saving you from penalties.

We ensure real-time alerts, document checklists, and one-click access to forms to help you never miss a deadline.

Conclusion

As cost audit rules tighten in 2025, detergent and soap manufacturers must align with the new turnover thresholds, CETA codes, and industry classification norms under the Companies Act.

Whether you're a local soap maker, a national detergent brand, or a contract manufacturer, maintaining accurate cost records and filing CRA forms on time is non-negotiable.

Avoid penalties. Prevent mismatches. Protect investor confidence.

👉 Consult SSCOIndia today for a smooth cost audit and ensure your CRA compliance is 100% audit-proof.

FAQs

Q1. Is cost audit mandatory for small-scale detergent units in 2025?
A: If your total turnover exceeds ₹100 crore and your detergent-specific revenue crosses ₹25 crore, cost audit becomes mandatory—even for small-scale units.

Q2. What turnover makes cost audit mandatory for soap manufacturers?
A: If you're under Table B, and your individual product turnover is ₹25 crore+ and total company turnover is ₹100 crore+, you fall under mandatory cost audit.

Q3. What if we fail to file CRA-4 on time?
A: Your company could face penalties up to ₹5 lakh and your cost auditor may also be fined. Plus, it may delay your statutory audit and attract MCA scrutiny.

Q4. Can SSCOIndia handle cost audit + ITR + GST all together?
A: Absolutely. We provide integrated compliance services, including cost audit (CRA-1 to CRA-4), GST return filing, and ITR support—especially tailored for FMCG manufacturers.