The Central Government may, by order, direct that:
Companies engaged in production of such goods or providing such services as may be prescribed,
Shall include in the books of account particulars relating to:
Material,
Labour, and
Other items of cost.
> The Central Government shall obtain prior approval of the concerned regulatory body (if any) before issuing such an order.
## 2. Rule 3 — Companies Required to Maintain Cost Records
Companies engaged in production of goods or providing services specified in:
Table A — Regulated Sectors (6 sectors), OR
Table B — Non-Regulated Sectors (33 sectors)
Threshold: Overall annual Turnover ≥ ₹35 crore from all products/services during the immediately preceding financial year.
## Regulated vs Non-Regulated
Type
Count
Table A (Regulated)
6 sectors
Table B (Non-Regulated)
33 sectors
## Quick Test for Applicability
```
Is company in Table A or B sector?
│
YES
│
Is T/O ≥ ₹35 Cr in last FY?
│
YES → Maintain Cost Records
```
## Note
Cost Audit is a separate requirement (different thresholds based on regulated/non-regulated sector turnover and product-specific turnover).
Cost records ≠ Cost audit. Maintenance of records is the first step; audit applies on top with additional thresholds.
Worked example
### Example 1
Example 1: ABC Ltd is in pharmaceuticals (Table B, non-regulated). Total turnover in FY 2024–25 = ₹40 crore. → Must maintain cost records from FY 2025–26 as turnover ≥ ₹35 crore.
### Example 2
Example 2: XYZ Ltd is in IT services (not listed in Table A or B). Turnover = ₹500 crore. → NOT required to maintain cost records (sector not covered).
### Example 3
Example 3: PQR Ltd, an electricity generation company (Table A, regulated sector), has turnover of ₹30 crore. → Below ₹35 crore threshold → NOT required to maintain cost records this year.
⚠️ Common exam mistakes
Assuming all companies must maintain cost records — only sector-specified companies above turnover threshold.
Mixing turnover threshold for cost RECORDS (₹35 Cr) with thresholds for cost AUDIT (which has additional limits).
Forgetting Central Government must obtain prior approval of concerned regulatory body (e.g., TRAI for telecom).
Believing Table A and Table B have the same compliance — Table A is regulated (stricter), Table B is non-regulated.
Confusing 'particulars' (material, labour, other costs) with full cost audit report — Sec 148(1) only mandates the records.
Bare-Act text Section 148(1) & Rule 3 · Companies Act, 2013 read with Companies (Cost Records and Audit) Rules, 2014 · click to expand
(1) Notwithstanding anything contained in this Chapter, the Central Government may, by order, in respect of such class of companies engaged in the production of such goods or providing such services as may be prescribed, direct that particulars relating to the utilisation of material or labour or to other items of cost as may be prescribed shall also be included in the books of account kept by that class of companies: Provided that the Central Government shall, before issuing such order in respect of any class of companies regulated under a special Act, consult the regulatory body constituted or established under such special Act.