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Companies (Cost Records and Audit) Rules, 2014 — Explained Rule by Rule
The rules decide whether you maintain cost records, get audited, or do neither. We walk through Rule 3 to Rule 7 in plain language, mapped to what it means for your company.
Overview
What the Cost Audit Rules Actually Cover
The Companies (Cost Records and Audit) Rules, 2014, framed under Section 148 of the Companies Act, set out which companies must maintain cost records, which of those must additionally undergo a cost audit, how a cost auditor is appointed, and how the resulting report is filed with the Ministry of Corporate Affairs. Six rules do most of the work: Rule 3 (sector classification), Rule 4 (audit thresholds), Rule 5 (records maintenance), Rule 6 (auditor appointment), Rule 6A (casual vacancy) and Rule 7 (exemptions).
Who Needs This
Who Needs to Understand These Rules
Companies nearing ₹35cr+ turnover
Manufacturing companies
Company secretaries
Foreign companies in India
Rule-by-Rule Summary
The Two Rules That Decide Applicability
Rule 3 — Sector Classification
Lists the regulated and non-regulated sectors covered by cost record requirements
Rule 4 — Audit Thresholds
Sets the turnover levels that trigger a mandatory cost audit
Rules 5 to 7, briefly
Rule 5 prescribes the cost record format (Form CRA-1). Rule 6 governs cost auditor appointment and CRA-2 filing. Rule 6A covers casual vacancies in the auditor role. Rule 7 sets out exemptions for exporters, SEZ units and captive power generators.
Why It Matters
Why Understanding the Rules Matters
Avoid misclassification
Misreading Rule 3 is the most common cause of missed cost audit compliance.
Plan filings on time
Knowing which rule triggers which form keeps CRA-2 to CRA-4 on schedule.
Avoid unnecessary cost
Understand exactly which rule applies before committing to a full audit engagement.
Board-ready documentation
A rule-mapped compliance position is easy to defend in board minutes and audits.
Track annual changes
Government notifications periodically amend sector lists and thresholds.
Cross-border clarity
Foreign companies get the same rule-based answer without guesswork.
How It Works
How We Apply the Rules to Your Company
A structured walk-through from sector classification to your final compliance position.
Start My Rule ReviewSector mapping under Rule 3
We match your NIC code and product lines against the regulated and non-regulated tables.
Threshold check under Rule 4
Standalone turnover is tested against the applicable audit thresholds.
Records review under Rule 5
We confirm whether CRA-1 format cost records are already being maintained correctly.
Appointment planning under Rule 6
If audit applies, we plan the board resolution and CRA-2 filing timeline.
Exemption check under Rule 7
Export revenue, SEZ status and captive generation are tested before finalizing.
Before You Start
Documents We Review Against the Rules
Financial statements
Product/service-wise turnover
Certificate of incorporation
Export revenue details
Sector Coverage
Industries We Serve
Why SSCOIndia
Why Choose SSCOIndia for Rules Advisory
ICMAI Cost Accountants
Written compliance position
Fast, no-obligation review
PAN India, foreign entities too
Questions
Frequently Asked Questions
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