New Delhi, Jan 27 (UNI) Keeping in view the huge cost and inconvenience involved in the maintenance of cost records, the industries, which are not producing essential commodities, should be exempted from the cost accounting rules.
As per the recommendations by the Confederation of Indian Industry (CII) all industries outside the ambit of Essential Commodities Act 1955, be exempted for the Cost Accounting Rules notified under the Companies Act with immediate effect.
The scope of cost record rules may be kept limited to the industries producing goods of essential nature, to ensure production and marketing of quality output most efficiently and cost effectively in the era of globalisation.
Under Section 209(1)(d) of the Companies Act 1956, various industries maintain cost records. At present, 44 industries have been mandated to maintain cost accounting records including details about production, quality control, raw material consumption, R&D expenses, export obligation, royalty payments, fixed assets and depreciation, among other things.
Maintenance of cost accounting records entails a huge cost for companies in terms of time and money. Very minute details of all components of cost have to be included even though it may be insignificant.
According to the industry body at times, it may not be possible to extract such minute details even through a sophisticated ERP system. Besides, maintenance of cost records is difficult for companies involved in the production of multiple commodities, as actual consumption records have to be maintained for power, fuel and utilities per unit of production for each type of product.
Moreover, non-application of these rules to traded imported goods put our local industry to an unfair cost disadvantage, by unnecessarily increasing its transaction costs.
Thus, it is important to consider the need for regulation in the particular industry while notifying it for mandatory maintenance of cost records.
The Cost Accounting is required to protect government revenues as well as to grant subsidies. While the Central Excise and Income tax laws assure government revenue, E-governance has also led to a lot of transparency in revenue collection, it added.
Besides, the subsidised products need to submit specific cost data to their concerned Ministries, who prescribe their own formats for the same.
UNI SG AK AS1543