Rule 6 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Rule 6 is the working rule of cost audit. It says when the cost auditor is appointed, what the auditor certifies, how the Central Government is informed in Form CRA-2, what the auditor's report in Form CRA-3 must contain and how the company files it in Form CRA-4. This article is as amended up to G.S.R. 361(E) dated 30 May 2025 (forms); the rule text is per the MCA e-book. Later amendments should be checked before you rely on it. If you want the process run for you, see our compliance advisory service.
A company covered by rules 3 and 4 must appoint a cost auditor within one hundred and eighty days of the commencement of every financial year, after taking the auditor's written consent and certificate. It informs the Central Government in Form CRA-2 within thirty days of the Board meeting or within one hundred and eighty days of the start of the year, whichever is earlier. The cost auditor reports in Form CRA-3 within one hundred and eighty days of the year-end, and the company files it in Form CRA-4 within thirty days of receiving the report.
Rule 6(1): the appointment
The category of companies specified in rule 3, subject to the thresholds in rule 4, must appoint a cost auditor within one hundred and eighty days of the commencement of every financial year. The appointment is made by the Board, because rule 2(c) defines a cost auditor as a Cost Accountant in practice appointed by the Board. The Act's own provision is section 148 of the Companies Act, 2013.
The proviso to rule 6(1) requires the company to obtain, before the appointment, the cost auditor's written consent and the certificate described in sub-rule (1A).
Rule 6(1A): what the certificate says
The cost auditor submits a certificate that:
- (a) the individual or the firm is eligible and not disqualified under the Act, the Cost and Works Accountants Act, 1959 and the rules or regulations under them;
- (b) the individual or the firm satisfies the criteria in section 141 of the Act, so far as may be applicable;
- (c) the proposed appointment is within the limits laid down by or under the authority of the Act; and
- (d) the list of proceedings against the cost auditor, the audit firm or any partner pending with respect to professional matters of conduct, as disclosed in the certificate, is true and correct.
Rule 6(2): informing the cost auditor and the Government
Every company referred to in sub-rule (1) must inform the cost auditor of the appointment and file a notice with the Central Government within thirty days of the Board meeting in which the appointment is made or one hundred and eighty days of the commencement of the financial year, whichever is earlier. The notice is filed electronically in Form CRA-2, with the fee specified in the Companies (Registration Offices and Fees) Rules, 2014; see our article on fees under those rules. Form CRA-2 was substituted by G.S.R. 361(E) of 30 May 2025, in force from 14 July 2025; use the form as currently notified. Our guide to filing Form CRA-2 covers the practical side.
Rule 6(3) and (3A): term, removal and vacancy
- Term. The cost auditor continues until the expiry of one hundred and eighty days from the closure of the financial year or until the cost audit report is submitted, for the financial year of appointment.
- Removal. The cost auditor may be removed before the term ends by a Board resolution, after a reasonable opportunity of being heard and with the reasons recorded in writing. The CRA-2 for another appointment must enclose the Board resolution. The cost auditor's right to resign is not affected.
- Casual vacancy (3A). A vacancy due to resignation, death or removal must be filled by the Board within thirty days, and the company informs the Central Government in Form CRA-2 within thirty days of the new appointment.
Rule 6(3B), (4) and (5): statements, report and Board
The cost statements, including other statements annexed to the report, must be approved by the Board of Directors before they are signed on behalf of the Board by a director authorised by it, and then submitted to the cost auditor. The cost auditor submits the report, with reservations, qualifications, observations or suggestions, in Form CRA-3. The signed report goes to the Board within one hundred and eighty days from the closure of the financial year, and the Board must consider and examine it, particularly any reservation or qualification.
Rule 6(6): CRA-4
Within thirty days from receipt of a copy of the cost audit report, the company furnishes it to the Central Government, with full information and explanation on every reservation or qualification, in Form CRA-4 in Extensible Business Reporting Language format, as set out in the XBRL Filing Rules, 2015, with the fees under the Registration Offices and Fees Rules. A proviso lets a company that obtained an extension of time for holding its Annual General Meeting under section 96(1) file CRA-4 within the resultant extended period for filing financial statements under section 137. See how to file Form CRA-4.
Rule 6(7): fraud reporting
Section 143(12) of the Act and the rules under it apply to a cost auditor, with the necessary changes, while performing functions under section 148 and these rules.
The timeline in one table
| Step | Who | Printed period |
|---|---|---|
| Appoint the cost auditor | Board | Within one hundred and eighty days of the start of the financial year |
| Consent and certificate | Cost auditor | Before the appointment |
| CRA-2 to the Central Government | Company | Thirty days of the Board meeting or one hundred and eighty days of the start of the year, whichever is earlier |
| Casual vacancy filled | Board | Thirty days of the vacancy |
| Report to the Board (CRA-3) | Cost auditor | One hundred and eighty days from the close of the financial year |
| CRA-4 to the Central Government | Company | Thirty days from receipt of the report |
Rule 7 and the Annexure
Rule 7 (the earlier exemption for exporters and SEZ units) is omitted; those exemptions now sit in rule 4(3) and are covered in our article on thresholds and CRA-1. The Annexure lists the four forms: CRA-1, CRA-2, CRA-3 and CRA-4. The remuneration of the cost auditor is fixed under rule 14 of the Audit and Auditors Rules, discussed in rules 13 and 14 of those rules.
A worked example
Rohan Chemicals Limited has a financial year starting on 1 April, and its cost audit is triggered under rule 4. The Board takes the consent and certificate of a cost accountant firm and appoints it at a meeting. The company informs the firm and files CRA-2 within thirty days of that meeting, or within one hundred and eighty days of 1 April, whichever date falls first. After the year, the firm forwards its signed report to the Board within one hundred and eighty days of the year-end, and the company files CRA-4 within thirty days of receiving it.
Need help with cost auditor appointment?
Missing the appointment window or filing CRA-2 late is easy when the Board calendar is crowded. Our compliance advisory team can draft the Board resolution, collect the consent and certificate and file the forms on time.
Key takeaways
- Appoint the cost auditor within one hundred and eighty days of the start of the financial year, after consent and certificate.
- CRA-2 goes to the Central Government within thirty days of the Board meeting or one hundred and eighty days of the start of the year, whichever is earlier.
- A casual vacancy is filled within thirty days and reported in CRA-2.
- The cost auditor reports in CRA-3 within one hundred and eighty days of the year-end; the company files CRA-4 within thirty days of receipt.
- Rule 7 is omitted; the forms are CRA-1 to CRA-4.
Read next
- Rules 4 and 5: cost audit thresholds and CRA-1 records
- Rules 1-3: which companies must keep cost records
- How to file Form CRA-2
- How to file Form CRA-4
Disclaimer: Based on the Companies Act, 2013 rules (and the Companies (Auditor's Report) Order, 2020) named above as consolidated in the MCA e-book (consulted on 3 October 2026), with the later notifications the article names. Later amendments, fees, forms and the Companies Act, 2013 provisions referred to should be checked. This article is general information, not legal advice; check the official text before acting.