Manufacturing Sector: Which Companies Need Cost Audit?
India’s manufacturing sector is vast — from steel to automobiles, from cement to textiles — and most of these industries are non-regulated sectors under CRA-1. But that doesn’t mean you can ignore cost audit rules.
In fact, if you’re in core manufacturing, there’s a high chance cost records and cost audits are applicable.
Industries Covered Under Cost Audit (Manufacturing)
The following key manufacturing sectors are included under the non-regulated sectorcategory:
- Steel and Iron
- Cement
- Automobile and Auto Components
- Textile & Garments
- FMCG manufacturing (non-food items)
- Paper, Glass, and Ceramics
- Paints and Dyes
- Aluminium and Copper
If your company operates in any of these sectors, it’s time to check your turnover.
Cost Audit Thresholds for Manufacturing Companies (2025)
For non-regulated sectors like manufacturing, the cost audit applicability is defined as follows:
| Criteria | Threshold |
|---|---|
| Overall turnover | > ₹100 crore |
| Revenue from covered products | > ₹35 crore |
Bonus Note for Exporters: If your exports cross ₹25 crore in value for covered manufacturing goods, you may also attract cost audit requirement, even if domestic revenue is limited.
Cost Records Are Still Mandatory
Even if your company doesn’t meet the audit threshold, you may still be required to maintain cost records if your product is covered under Rule 3. These records must follow the format specified in CRA-1, and include:
- Production quantities
- Per unit cost breakup
- Material, labor, and overhead costs
- Profitability segment-wise
CRA-2 and CRA-3 Filing Compliance
Once cost audit becomes applicable:
- You must appoint a Cost Auditor by filing CRA-2 within 180 days of FY start.
- You must submit CRA-3, the cost audit report, to the MCA within 180 days from the end of the financial year.
What If You Miss CRA-2 or CRA-3?
Late or non-filing can lead to:
- Penalty of ₹100/day
- Show-cause notices from MCA
- Ineligibility to file CRA-4 (final submission)
- Directors being held liable under Section 450 of the Companies Act
√ Final Thoughts: Don’t Ignore CRA Rules in Manufacturing
Many manufacturing businesses assume cost audit is for “big companies only.” But with India tightening compliance standards in 2025, it’s essential to:
- √ Conduct a CRA-1 applicability check
- √ Track turnover across product lines
- √ File CRA-2 and CRA-3 on time
- √ Engage a qualified Cost Accountant
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