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Notice inviting comments on the draft Companies (Cost Records and Audit) Amendment Rules 2016
February, 24th 2016
                     GOVERNMENT OF INDIA
                    Ministry of Corporate Affairs


                                          Dated the 23rd February, 2016

1.    The Draft Companies (Cost Records and Audit) Amendment Rules,
2016 has been placed on the Ministry's website at It has
been decided to invite suggestions/comments on the above draft.
2.        Suggestions/comments on above mentioned draft along with the
justifications in brief may be sent latest by 08.03.2016 through email
at It is requested that the name, contact number and
postal address of the sender be indicated clearly at the time of sending

Name, Postal Address, Contact No. of Stake holder ________________

SL.No        Rule No.           Suggestion (s)   Justification (s)
      [To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i)]

                                       GOVERNMENT OF INDIA
                                   MINISTRY OF CORPORATE AFFAIRS

                                           DRAFT NOTIFICATION

                                                                      New Delhi, the ............... March, 2016

G.S.R................. (E).- In exercise of the powers conferred by sub-sections (1) and (2) of section 469 and
section 148 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the
following rules further to amend the Companies (cost records and audit) Rules, 2014, namely:-

1.      (1) These rules may be called the Companies (cost records and audit) Amendment Rules, 2016.

        (2) They shall come into force from the date of their publication in the official Gazette.

2.      In the Companies (cost records and audit) Rules, 2014,-

(i)     in rule 3, for the Table A and Table B, the following Table A and Table B shall respectively be
        substituted, namely:-

        (A) Regulated Sectors

          Sl.    Industry/ Sector/ Product/ Service                                    CETA Heading
          No.                                                                          (wherever
          1.     Telecommunication services made available to users by means of Not applicable.
                 any transmission or reception of signs, signals, writing, images and
                 sounds or intelligence of any nature under the authorization/
                 license issued by the Department of Telecommunications,
                 Government of India under Indian Telegraph Act, 1885 and
                 regulated by the Telecom Regulatory Authority of India under the
                 Telecom Regulatory Authority of India Act, 1997 (24 of 1997);
          2.     Generation, transmission, distribution and supply of electricity Generation-
                 regulated by the relevant regulatory body or authority under the 2716;
                 Electricity Act, 2003 (36 of 2003), other than for captive generation Other Activity-
                 (referred to in the Electricity Rules, 2005);                         Not Applicable
          3.     Petroleum products including activities regulated by the Petroleum 2709 to 2715;
                 and Natural Gas Regulatory Board under the Petroleum and
                 Natural Gas Regulatory Board Act, 2006 (19 of 2006);                  Other Activity-
                                                                                       Not Applicable
          4.     Drugs and pharmaceuticals;                                            2901 to 2942;
                                                                                       3001 to 3006.
          5.     Fertilisers;                                                          3102 to 3105.
 6.    Sugar and industrial alcohol;                                       1701;     1703;

(B) Non-regulated Sectors

 Sl.   Industry/ Sector/ Product/ Service                       CETA Heading (wherever
 No.                                                            applicable)
 1.    Machinery and mechanical appliances used in 8401; 8801 to 8805; 8901 to
       defence, space and atomic energy sectors excluding 8908.
       any ancillary item or items;
       Explanation. - For the purposes of this sub-clause, any
       company which is engaged in any item or items
       supplied exclusively for use under this clause, shall be
       deemed to be covered under these rules
 2.    Turbo jets and turbo propellers;                         8411
 3.    Arms, ammunitions and Explosives;                        3601 to 3603; 9301 to 9306.
 4.    Propellant powders; prepared explosives (other than 3601 to 3603
       propellant powders); safety fuses; detonating fuses;
       percussion or detonating caps; igniters; electric
 5.    Radar apparatus, radio navigational aid apparatus 8526
       and radio remote control apparatus;
 6.    Tanks and other armoured fighting vehicles, 8710
       motorised, whether or not fitted with weapons and
       parts of such vehicles, that are funded (investment
       made in the company) to the extent of ninety per cent
       or more by the Government or Government agencies;
 7.    Port services of stevedoring, pilotage, hauling, Not applicable.
       mooring, re-mooring, hooking, measuring, loading
       and unloading services rendered by a Port in relation
       to a vessel or goods regulated by the Tariff Authority
       for Major Ports under section 47A of the Major Port
       Trusts Act, 1963(38 of 1963);
 8.    Aeronautical services of air traffic management, Not applicable
       aircraft operations, ground safety services, ground
       handling, cargo facilities and supplying fuel rendered
       by airports and regulated by the Airports Economic
       Regulatory Authority under the Airports Economic
       Regulatory Authority of India Act, 2008 (27 of 2008);
 9.    Iron and Steel;                                          7201 to 7229; 7301 to 7326
 10.   Roads      and     other     infrastructure    projects Not applicable.
       corresponding to para No. (1) (a) as specified in
       Schedule VI of the Companies Act, 2013;
 11.   Rubber and allied products including products 4001 to 4017
       regulated by the Rubber Board constituted under the
       Rubber Act, 1947 (XXIV of 1947).
 12.   Coffee and tea;                                          0901 to 0902
 13.   Railway or tramway locomotives, rolling stock, 8601 to 8608.
       railway or tramway fixtures and fittings, mechanical
      (including electro mechanical) traffic signalling
      equipment's of all kind;
14.   Cement;                                                 2523; 6811 to 6812
15.   Ores and Mineral products;                              2502 to 2522; 2524 to 2526;
                                                              2528 to 2530; 2601 to 2617
16.   Mineral fuels (other than Petroleum), mineral oils 2701 to 2708
17.   Base metals;                                            7401 to 7403; 7405 to 7413;
                                                              7419; 7501 to 7508; 7601 to
                                                              7614; 7801 to 7802; 7804;
                                                              7806; 7901 to 7905; 7907;
                                                              8001; 8003; 8007; 8101 to
18.   Inorganic chemicals, organic or inorganic compounds 2801 to 2853; 2901 to 2942;
      of precious metals, rare-earth metals of radioactive 3801 to 3807; 3402 to 3403;
      elements or isotopes, and Organic Chemicals;            3809 to 3824.
19.   Jute and Jute Products;                                 5303, 5310
20.   Edible Oil;                                             1507 to 1518
21.   Construction Industry as per para No. (5) (a) as Not applicable.
      specified in Schedule VI of the Companies Act, 2013
      (18 of 2013)
22.   Health services, namely functioning as or running Not applicable.
      hospitals, diagnostic centres, clinical centres or test
23.   Education services, other than such similar services Not applicable.
      falling under philanthropy or as part of social spend
      which do not form part of any business.
24.   Milk powder;                                            0402
25.   Insecticides;                                           3808
26.   Plastics and polymers;                                  3901 to 3914; 3916 to 3921;
27.   Tyres and tubes;                                        4011 to 4013
28.   Paper;                                                  4801 to 4802.
29.   Textiles;                                               5004 to 5007; 5106 to 5113;
                                                              5205 to 5212; 5303; 5310;
                                                              5401 to 5408; 5501 to 5516
30.   Glass;                                                  7003 to 7008; 7011; 7016
31.   Other machinery and Mechanical Appliances;              8402 to 8487
32.   Electricals or electronic machinery;                    8501 to 8507; 8511 to 8512;
                                                              8514 to 8515; 8517; 8525 to
                                                              8536; 8538 to 8547.
33.   Production, import and supply or trading of following 9018 to 9022
      medical devices, namely:-
      (i) Cardiac stents;
      (ii) Drug eluting stents;
      (iii) Catheters;
      (iv) Intra ocular lenses;
      (v) Bone cements;
      (vi) Heart valves;
      (vii) Orthopaedic implants;
      (viii) Internal prosthetic replacements;
               (ix) Scalp vein set;
               (x) Deep brain stimulator;
               (xi) Ventricular peripheral shud;
               (xii) Spinal implants;
               (xiii) Automatic impalpable cardiac deflobillator;
               (xiv) Pacemaker (temporary and permanent);
               (xv) Patent ductus arteriosus, atrial septal defect and
               ventricular septal defect closure device;
               (xvi) Cardiac re-synchronize therapy ;
               (xvii) Urethra spinicture devices;
               (xviii) Sling male or female;
               (xix) Prostate occlusion device; and
               (xx) Urethral stents:

(ii)    in rule 6, in sub-rule (1), the following proviso shall be inserted, namely: --
        "Provided that before such appointment is made, the written consent of the cost auditor to
        such appointment, and a certificate from him or it that the appointment, if made, shall be in
        accordance with the following conditions shall be obtained from the cost auditor:
              (a) the individual or the firm, as the case may be, is eligible for appointment and is
              not disqualified for appointment under the Act, the Cost and Works Accountants Act,
              1959 and the rules or regulations made thereunder;
              (b) the individual or the firm, as the case may be, satisfies the criteria provided in
              section 141 of the Act;
              (c) the proposed appointment is within the limits laid down by or under the authority
              of the Act;
              (d) the list of proceedings against the cost auditor or audit firm or any partner of the
              audit firm pending with respect to professional matters of conduct, as disclosed in
              the certificate, is true and correct."
(iii)   in rule 6, in sub-rule (3), the following proviso shall be inserted, namely: --
        "Provided that the cost auditor appointed under these rules may be removed from his
        office before the expiry of his term only through a resolution passed in the meeting of
        Board of Directors after recording the reasons for such removal in writing:
        Provided further that the form CRA-2 to be filed with the Central Government for
        intimating appointment of another cost auditor shall enclose the relevant Board
        Resolution to the effect:
        Provided also that nothing contained in this sub-rule shall prejudice the right of the cost
        auditor to resign from such office of the company."
(iv)    in rule 6, after sub-rule (3A), following sub-rule shall be inserted, namely:-
        "(3B) The cost statements, including other statements to be annexed to the cost audit
        report, shall be approved by the Board of Directors before they are signed on behalf of the
        Board by any of the director authorized by the Board, for submission to the cost auditor to
        report thereon"

(v)     in rule 6, for sub-rule (5), the following sub-rule shall be substituted, namely:-
        "Every cost auditor shall forward his duly signed report to the Board of Directors of the
        company within a period of one hundred and eighty days from the closure of the financial
        year to which the report relates and the Board of Directors shall consider and examine such
        report, particularly any reservation or qualification contained therein."
(vi)    in rule 6, for sub-rule (6), the following sub-rule shall be substituted, namely:-
        "Every company covered under these rules shall, within a period of thirty days from the date
        of receipt of a copy of the cost audit report, furnish the Central Government with such report
        alongwith full information and explanation on every reservation or qualification contained
        therein, in form CRA-4 in Extensible Business Reporting Language (XBRL) format in the manner
        as specified in the Companies (Filing of Documents and Forms in Extensible Business Reporting
        language) Rules, 2015 alongwith fees specified in the Companies (Registration Offices and
        Fees) Rules, 2014."

                                                                                 [F.No. 1/40/2013-CL-V]

                                                                        AMARDEEP SINGH BHATIA,
                                                                    Jt. Secy., Government of India

Note.- The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-
section (i), vide number G.S.R. 425 (E), dated the 30th June, 2014 and amended vide number G.S.R.
01(E), dated the 31st December, 2014 and vide number G.S.R. 486 (E), Dated the 12th June, 2015.
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