What turnover triggers cost audit applicability?

Applicability is based on overall company turnover and, separately, the turnover of the specific product or service falling under Table A or Table B of the Cost Records Rules, not turnover from one product alone.

Is cost audit applicable to private limited companies?

Yes. Applicability depends on the activity and turnover thresholds, not on whether the company is private or public, so a private limited company engaged in a covered sector can be in scope.

Are foreign subsidiaries in India covered?

An Indian subsidiary or unit of a foreign company is treated the same as any other Indian company under these rules and is covered if its activity and turnover meet the thresholds.

What happens if a company crosses the threshold mid-year?

Once a company crosses the prescribed turnover threshold in a financial year, cost record maintenance and cost audit obligations typically apply from that year onward, subject to the specific rule conditions.

Cost Audit Applicability in India | Who Needs a Cost Audit?

Overview

What "Cost Audit Applicability" Actually Means

Under the Companies (Cost Records and Audit) Rules, 2014, certain companies must maintain cost records and get them audited by a Cost Accountant, in addition to their statutory financial audit. Applicability is decided industry-by-industry, using two separate lists — regulated sectors (Table A) and non-regulated sectors (Table B) — each with its own turnover threshold.

Getting this wrong in either direction is costly: unnecessary compliance drains time and fees, while missed applicability exposes the company and its officers to penalties under Section 148 of the Companies Act, 2013.

The Two-Step Applicability Test

Sector Test — does your company's activity fall under Table A (regulated) or Table B (non-regulated) of the rules?

Threshold Test — does overall turnover, and turnover from the covered product/service, cross the prescribed limit?

Who Needs This

Companies That Should Check Applicability

Manufacturing Companies

Producing goods under a covered HSN/product category, regardless of ownership structure.

Foreign-Owned Subsidiaries

Indian entities of foreign parent companies operating in a listed sector.

Regulated Sector Entities

Electricity, telecom, petroleum, and other Table A sectors with lower thresholds.

Fast-Growing Private Companies

Companies approaching turnover thresholds who need to plan ahead, not react.

Applicability Thresholds

Turnover & Net Worth Criteria

Table A — Regulated Sectors

Overall annual turnover of ₹50 crore or more in the preceding financial year
Turnover from the covered product or service of ₹25 crore or more
Includes sectors like electricity, telecom, petroleum, and drugs & pharmaceuticals

Table B — Non-Regulated Sectors

Overall annual turnover of ₹100 crore or more in the preceding financial year
Turnover from the covered product or service of ₹35 crore or more
Includes machinery, chemicals, electronics, auto components, and engineering goods

Companies exclusively exporting, or earning most revenue in foreign exchange, and MSMEs below the prescribed thresholds are generally exempt — but exemption boundaries are specific and worth verifying against your latest audited figures.

Benefits

Why Get an Applicability Check Done Early

Avoid Section 148 Penalties

Non-compliance can attract penalties on the company and every officer in default.

Plan CRA-2 Filing Timelines

Knowing applicability early gives you time to appoint a cost auditor within the deadline.

Structure Cost Records Correctly

Set up compliant cost record systems from day one instead of retrofitting later.

Avoid Unnecessary Compliance

Confirm you're genuinely out of scope instead of over-complying out of caution.

Board & Investor Confidence

Demonstrate proactive regulatory diligence to your board and investors.

Cost Auditor Appointment Support

We help you appoint and notify a qualified cost auditor once applicability is confirmed.

How It Works

Our Applicability Assessment Process

Business & Sector Mapping

We map your products/services against Table A and Table B classifications.

Financial Data Review

We review your last audited turnover, net worth, and segment-wise revenue.

Threshold Testing

We apply the exact overall and product-level turnover tests under Rule 3 & 4.

Written Applicability Opinion

You receive a documented conclusion you can share with your board and auditors.

Next-Step Compliance Plan

If applicable, we outline cost records setup, CRA-2 filing, and audit timelines.

Documents Required

What We'll Need From You

Audited Financials

Last 2–3 years' financial statements

Product/Segment Revenue

Product or service-wise turnover breakup

MOA/AOA & CIN Details

To confirm registered business activity

Group/Shareholding Structure

Relevant for foreign subsidiaries & group companies

Why SSCOIndia

Cost Accountants Who Know the Rules Cold

Qualified Cost Accountants

Direct advisory from practicing Cost Accountants, not sales staff.

Experience With Foreign Subsidiaries

Familiar with the specific concerns of India-entry manufacturing units.

Turnaround-Focused

Written applicability opinions delivered within days, not weeks.

End-to-End Support

From applicability to CRA filings to the final cost audit report.

FAQs

Cost Audit Applicability — Common Questions

Applicability is based on both your company's overall turnover and the turnover of the specific product or service covered under Table A or Table B — not turnover from a single unrelated product line.

Yes. Applicability depends on sector and turnover thresholds, not company type, so a private limited company in a covered sector is in scope the same way a public company would be.

Yes. An Indian subsidiary or unit is assessed the same as any Indian company, so foreign ownership does not exempt it if the sector and turnover conditions are met.

Once the prescribed turnover threshold is crossed in a financial year, cost record and audit obligations generally apply from that year, so it's worth reassessing applicability whenever turnover grows sharply.

Only a practicing Cost Accountant, or a firm of Cost Accountants holding a valid certificate of practice, can be appointed as the cost auditor.

Non-compliance can attract penalties on the company and on every officer in default under Section 148 of the Companies Act, 2013, in addition to reputational and audit-related consequences.

Rule 3 & Rule 4 Assessment