Section 25 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.
Section 25 says that no company may practise as chartered accountants. A company that does so, and every director, manager, secretary or other officer who is knowingly a party to it, can be fined. An Explanation brings in a limited liability partnership that has a company as a partner. This article follows the text as per the Act as printed in the ICAI edition of 2022 (amended up to the Chartered Accountants, the Cost and Works Accountants and the Company Secretaries (Amendment) Act, 2022).
No company, whether incorporated in India or elsewhere, shall practise as chartered accountants. The Explanation treats a limited liability partnership which has a company as its partner as a company for this section. Officers who are knowingly a party to the contravention face a fine of not less than two lakh rupees and up to ten lakh rupees on first conviction, and not less than four lakh rupees and up to twenty lakh rupees on a later conviction. These fines are in force from 10 May 2022.
Why the bar exists
Chartered accountancy under the Act is a profession of members: only members hold certificates of practice, only members sign on behalf of a practising firm, and members are answerable to the Institute's disciplinary bodies. A company is none of these. Section 25 keeps the practice of the profession with members and their firms and stops it moving into corporate vehicles that fall outside this structure.
If you are setting up a structure for an accountancy practice, or a client asks whether a group company can offer attestation or audit-type services, the first check is this section. Our compliance advisory team can help you review the structure against the Act before it is put in place.
Section 25(1): the bar
"No company, whether incorporated in India or elsewhere, shall practise as chartered accountants."
Three points follow from the words.
- Any company. The section does not distinguish between private and public companies, and it does not distinguish by where the company is incorporated.
- "Practise as chartered accountants". What counts as practice by a member is set out in section 2(2), explained in our article on when a member is deemed to be in practice. Section 25 applies the verb to a company.
- No exception printed. An earlier sub-section (3), which said that the section did not apply to a university established by law or a body affiliated to the Institute, was omitted by the Chartered Accountants (Amendment) Act, 2006 with effect from 8 August 2006. The current text carries no exception.
The Explanation on LLPs
The Explanation was inserted by the Chartered Accountants (Amendment) Act, 2012, in force from 1 February 2012. It says that, "for the removal of doubts", the company "shall include any limited liability partnership which has company as its partner for the purposes of this section".
The test is the partner, not the form. An LLP whose partners are all individuals is not caught by the Explanation. An LLP with a company as one of its partners is treated as a company and cannot practise as chartered accountants. The Explanation is silent on how many companies, or what share they hold; it says only "has company as its partner". For the LLP framework itself, see our guide to the LLP Act, 2008.
Section 25(2): who is punished
Where a company contravenes sub-section (1), then, without prejudice to any other proceedings against the company, every director, manager, secretary and any other officer thereof who is knowingly a party to such contravention shall be punishable with fine.
| Conviction | Fine |
|---|---|
| First | Not less than two lakh rupees, up to ten lakh rupees |
| Subsequent | Not less than four lakh rupees, up to twenty lakh rupees |
Four things stand out.
- The word "knowingly". An officer who did not know of the contravention is outside the clause. The text does not say how knowledge is proved.
- Fine only. The sub-section provides no imprisonment.
- Minimum fines. The 2022 Amendment Act added the floors of two lakh and four lakh rupees and raised the ceilings, in force from 10 May 2022. Earlier figures are not the law now.
- Proceedings against the company remain. The words "without prejudice to any other proceedings" keep other action open against the company, and the section does not list what it may be.
The edition prints the cross-reference in section 25(2) as "sub-section (i)", though the contravention in question is of sub-section (1). The reading is plain from the context.
Prosecution
A person cannot be prosecuted under the Act except on a complaint made by, or under the order of, the Council or the Central Government (section 28). Our article on sections 27 and 28 explains the rule.
A worked example
Brightline Advisory Private Limited, an invented company, advertises "statutory audit and attestation by our chartered accountants" and issues signed reports in its own name. The company is practising as chartered accountants, which section 25(1) bars. The directors and the company secretary who knew of and approved the practice are exposed to the fines in section 25(2). A different company that employs a chartered accountant in service for its own accounts is not offering the profession to the public; the section is aimed at practice as chartered accountants.
Now suppose a group wants to offer accountancy services through an LLP in which a group company is a partner. The Explanation treats that LLP as a company for the section, so the structure needs to be checked before launch.
Commencement note
Section 25 is in force as printed, including the 2022 fines from 10 May 2022. Later amendments and notifications should be checked.
Need help with the structure of a practice?
Choosing between a firm of members, an LLP of individuals and other vehicles needs a careful read of section 25 and the related provisions. Our compliance advisory team can review the proposed structure and the documents behind it.
Key takeaways
- No company, Indian or foreign, may practise as chartered accountants.
- An LLP that has a company as its partner is treated as a company for section 25.
- Directors, managers, secretaries and officers knowingly party face fines of two to ten lakh rupees (first conviction) and four to twenty lakh rupees (later).
- Prosecution needs a complaint by or under the order of the Council or the Central Government.
Read next
- Section 24: penalty for falsely claiming membership
- Section 26: unqualified persons not to sign documents
- Sections 20A–20D: registration and register of firms
- Cost Accountants Act, 1959: sections 26 and 27
Disclaimer: Based on the Chartered Accountants Act, 1949 as printed in the ICAI edition of 2022 (amended up to Act 12 of 2022), read with S.O. 2184(E) dated 10 May 2022, which brought only part of the 2022 amendments into force, as consulted on 3 October 2026. Regulations, rules, Council guidelines, later amendments and commencement notifications should be checked. This article is general information, not legal advice; check the official text before acting.