MCA panel suggests raising to Rs 75 crore the threshold for businesses to maintain, audit cost accounts

This recommendation is part of the government's broader strategy to support SMEs.

To ease the compliance burden of small and medium enterprises (SMEs), a government panel has suggested significantly raising the turnover threshold for companies to maintain and audit cost accounts.

The panel has recommended increasing the limit to Rs 75 crore in any of the past three years, the Economic Times has reported.

At present, the mandated turnover limits are set at Rs 25 crore for companies in six regulated sectors and Rs 35 crore 33 unregulated sectors.

A company that exceeds these thresholds must conduct mandatory cost audits and maintain detailed cost accounts.

Under the new proposal, these requirements would only apply to companies with a turnover of Rs 75 crore or more, the report said.

Moneycontrol couldn’t verify the report independently.

The Ministry of Corporate Affairs (MCA), which received the committee's report, has now sought comments from stakeholders with feedback deadline set for the end of this month.

If adopted, the new rules could exempt many small and mid-sized companies from the burdensome compliance requirements, allowing them to focus on their core operations. However, cost records would still be mandatory for government infrastructure projects exceeding Rs 100 crore.

The proposed changes would apply to 35 of the 39 sectors covered under the existing regulations. The committee has also suggested including 16 new sectors. Among the new sectors healthcare, telecom, and infrastructure may require unique accounting frameworks due to their operational characteristics.

This recommendation is part of the government's broader strategy to support SMEs, which play a crucial role in India's economy.

By reducing regulatory pressures, the government aims to foster a more conducive environment for these businesses to thrive and contribute to economic growth.

The feedback from stakeholders will be instrumental in finalising the new regulations, ensuring they are both practical and effective in achieving their intended objectives.