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India Eyes Audit Exemption for Small Businesses
26 Nov
Summary
- Companies with turnover up to Rs 1 crore may be exempt from mandatory audits.
- Proposal aims to reduce compliance costs for micro-enterprises.
- Amendment to Companies Act is expected in the Winter Session.
A significant compliance relief for micro-enterprises is under consideration by the Ministry of Corporate Affairs. The proposal seeks to exempt companies with an annual turnover of up to Rs 1 crore from mandatory statutory audits. This potential amendment to Section 139 of the Companies Act is slated for introduction in the upcoming Winter Session.
Officials suggest that audits for micro-enterprises rarely uncover material issues and add minimal practical value, while significantly increasing compliance expenses. The current law mandates audits for all company types, forming the basis for financial statements and regulatory filings.
While proponents argue for reduced costs, some experts caution that removing statutory audits could create a compliance vacuum and weaken accounting accuracy oversight for smaller businesses. The draft amendment is expected to generate considerable discussion once presented.
