Records Rules of Cost Accounting 2011
This query is : Resolved
16 July 2011
Q:- I want to know whether Real Estate or Construction compamnies comes under New Guildelines.
17 July 2011
NO.
In a move that is expected to bring cheers on the faces of Cost Accountants, the Ministry of Corporate Affairs (MCA) has accepted the recommendations sent by ICWAI to discontinue the existing system of ordering Cost Audits on a company to company basis in the same Industry.
The Ministry of Corporate Affairs vide Notification no. dated 2nd May 2011 has issued Mandatory Cost Audit orders on All Companies engaged in:-
1)Bulk Drugs
2)Formulations
3)Fertilizers
4)Sugar
5)Industrial Alcohol
6)Electricity
7)Petroleum
8)Telecommunication
Companies operating in any of the above Industries and falling in the Criteria specified below shall mandatorily get their Cost Audits done if during the immediate previous financial year: -
Aggregate value of Net Worth exceeds 5 Crores or
Aggregate value of Turnover exceeds 20 Crores or
Company’s Equity or Debt Securities are Listed or are in the process of Getting Listed whether in India or outside India
On the same lines, the Ministry issued another notification on 3rd May 2011 mandating compulsory Cost Audits for All Companies engaged in: -
1)Cement
2)Tyres and Tubes
3)Steel Plant
4)Steel Tubes and Pipes
5)Paper or Insecticides
Companies operating in any of the above Industries are required to get their Cost Audits done only if during the immediate previous financial year: -
Aggregate Value of Turnover exceeds 100 Crore
Company’s Equity or Debt Securities are Listed or are in the process of Getting Listed whether in India or outside India.
The companies falling under the above categories will be required to get cost audit conducted u/s 233B of the Companies Act 1956 by a cost accountant in practice or a firm of cost accountants for each of the financial year commencing from April 1, 2011.
In a move that is expected to bring cheers on the faces of Cost Accountants, the Ministry of Corporate Affairs (MCA) has accepted the recommendations sent by ICWAI to discontinue the existing system of ordering Cost Audits on a company to company basis in the same Industry.
The Ministry of Corporate Affairs vide Notification no. dated 2nd May 2011 has issued Mandatory Cost Audit orders on All Companies engaged in:-
1)Bulk Drugs
2)Formulations
3)Fertilizers
4)Sugar
5)Industrial Alcohol
6)Electricity
7)Petroleum
8)Telecommunication
Companies operating in any of the above Industries and falling in the Criteria specified below shall mandatorily get their Cost Audits done if during the immediate previous financial year: -
Aggregate value of Net Worth exceeds 5 Crores or
Aggregate value of Turnover exceeds 20 Crores or
Company’s Equity or Debt Securities are Listed or are in the process of Getting Listed whether in India or outside India
On the same lines, the Ministry issued another notification on 3rd May 2011 mandating compulsory Cost Audits for All Companies engaged in: -
1)Cement
2)Tyres and Tubes
3)Steel Plant
4)Steel Tubes and Pipes
5)Paper or Insecticides
Companies operating in any of the above Industries are required to get their Cost Audits done only if during the immediate previous financial year: -
Aggregate Value of Turnover exceeds 100 Crore
Company’s Equity or Debt Securities are Listed or are in the process of Getting Listed whether in India or outside India.
The companies falling under the above categories will be required to get cost audit conducted u/s 233B of the Companies Act 1956 by a cost accountant in practice or a firm of cost accountants for each of the financial year commencing from April 1, 2011.
18 July 2011
But as per notification of 3rd june 2011, No.-233, under processing activity, construction of building is comes under maintaning cost records. the same can checked on google with search title - cost record rules 2011
20 July 2025
Here’s a clear summary about whether Real Estate or Construction companies come under the Cost Accounting Records Rules 2011 based on your notes and the latest updates:
1. Are Real Estate or Construction companies covered under Cost Accounting Records Rules 2011?
Initially NO.
The Ministry of Corporate Affairs (MCA) in May 2011 issued mandatory Cost Audit orders covering specific industries such as Bulk Drugs, Fertilizers, Sugar, Petroleum, Cement, Steel, etc.
Real Estate or Construction was not explicitly included in these initial notifications.
2. What about Construction activity under Processing Activity?
According to the notification dated 3rd June 2011, No.-233,
construction of buildings is included under the scope of maintaining cost records as a “processing activity.”
This means that construction companies engaged in building construction may be required to maintain cost records under Cost Accounting Rules.
You can verify this by searching for "Cost Records Rules 2011 construction activity" which confirms that cost records maintenance is applicable for construction-related activities.
3. Summary:
Point Details
Are Real Estate companies covered? Initially No, but construction activity is included as per later notification.
Is Construction of buildings covered? Yes, as a processing activity, construction falls under cost record maintenance rules.
Cost Audit applicability depends on: Turnover, net worth, listing status as per MCA notifications.
4. What should construction companies do?
Check if their turnover, net worth, or listing status meets the threshold criteria for cost audit.
Maintain cost records as specified under the Cost Accounting Records Rules for construction activity.
Engage a cost accountant for audit if mandated.
1. Are Real Estate or Construction companies covered under Cost Accounting Records Rules 2011?
Initially NO.
The Ministry of Corporate Affairs (MCA) in May 2011 issued mandatory Cost Audit orders covering specific industries such as Bulk Drugs, Fertilizers, Sugar, Petroleum, Cement, Steel, etc.
Real Estate or Construction was not explicitly included in these initial notifications.
2. What about Construction activity under Processing Activity?
According to the notification dated 3rd June 2011, No.-233,
construction of buildings is included under the scope of maintaining cost records as a “processing activity.”
This means that construction companies engaged in building construction may be required to maintain cost records under Cost Accounting Rules.
You can verify this by searching for "Cost Records Rules 2011 construction activity" which confirms that cost records maintenance is applicable for construction-related activities.
3. Summary:
Point Details
Are Real Estate companies covered? Initially No, but construction activity is included as per later notification.
Is Construction of buildings covered? Yes, as a processing activity, construction falls under cost record maintenance rules.
Cost Audit applicability depends on: Turnover, net worth, listing status as per MCA notifications.
4. What should construction companies do?
Check if their turnover, net worth, or listing status meets the threshold criteria for cost audit.
Maintain cost records as specified under the Cost Accounting Records Rules for construction activity.
Engage a cost accountant for audit if mandated.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Households luggage
- GENERATE E-INOICE IF TURNOVER EXCEED 5 CR FROM YODAY
- Fixed asset entry in tally
- TDS 194IB FY 2025-2026
- Taxability in hand of employee
- GST procedure on conversion of Partnership Firm to Pvt Ltd
- Central excise duty structure after 01/02/2026
- Succession act
- Capital contribution of Land into SPV for Specific project attracts Income Tax & why ?
- COP and Employment with CA Firm
- P&L and B/s Format for Public Companies
- Regarding change in correspondence address in SSP portal
- Regarding Advance Tax not claimed in the Return of Income for A.Y. 2025-26
- No Compliences after incorporation
- USEFUL LIFE OF USED/SECOND HAND COMMERCIAL VEHICLES
- Claiming TDS deducted by builder on Hardship compensation and Corpus
- Address Change to another state of a Registered Trust with 12AB approval
- Updated return in budget 2026
- Clarification Required on GST Rate & HSN Classification – Millet-Based Probiotic Drink
- TDS Return filing if only have 15G /15H deductions and no other payments
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani -
IDT LIVE Exam Oriented Batch | May 2026, Sept 2026 & Jan 2027
CA Arpita Tulsyan
CAclubindia
