Is Cost Audit Applicable to an LLP?

No. Cost audit comes from section 148 of the Companies Act, 2013 and the Companies (Cost Records and Audit) Rules, 2014, which apply to companies. We found no cost records or cost audit requirement under the LLP Act, and section 148 is not among the Companies Act sections extended to LLPs.

What cost audit is

A company in a covered sector must keep cost records if its overall turnover in the preceding year was ₹35 crore or more. It must also have them audited if it is in a regulated sector with overall turnover of ₹50 crore or more and ₹25 crore or more from the covered product or service, or in a non-regulated sector with ₹100 crore overall and ₹35 crore from the covered product or service. Micro and small enterprises are exempt. The full explanation is on our sister site: cost audit applicability for companies.

Why an LLP is outside it

Section 148 and the cost rules speak of companies. A Companies Act provision reaches an LLP only if the Central Government extends it under section 67 of the LLP Act. The extensions we found are a notification of 30 January 2020 (section 460, condonation of delay) and notification G.S.R. 110(E) dated 11 February 2022, which covers eight sections (sections 90, 164, 165, 167, 206(5), 207(3), 252 and 439). Section 148 is not one of them.

A caveat. We found no statement by the Ministry of Corporate Affairs or the Institute of Cost Accountants that deals with LLPs by name. The conclusion rests on the wording of section 148 and the cost rules, and on the absence of any extension to LLPs.

What an LLP has instead

An LLP’s accounts are audited under section 34 of the LLP Act where contribution exceeds ₹25 lakh or turnover exceeds ₹40 lakh, as the audit rule is normally applied. Tax audit under the Income-tax Act is a separate matter with its own limits. See LLP audit requirement and the LLP income tax return and tax audit deadlines.

When cost audit could matter to an LLP owner

• Converting the LLP into a company. A company in a covered sector is then tested on its own turnover against the cost records and cost audit limits.
• A company in the same group. A company owned by the same people is tested on its own figures. The LLP’s turnover is not added to it.

Frequently asked questions

Is cost audit mandatory for an LLP?
We found no requirement. Section 148 is a Companies Act provision about companies and has not been extended to LLPs.

Does an LLP have to maintain cost records?
Not under section 148, as far as we could find. The cost records rule applies to companies in covered sectors.

Does an LLP need any audit?
Yes, when contribution exceeds ₹25 lakh or turnover exceeds ₹40 lakh, under section 34 of the LLP Act.

What happens if we convert an LLP into a company?
The company is tested on its own turnover and sector against the cost records and cost audit limits.

Position as at 1 October 2026, based on section 148 of the Companies Act, 2013, section 67 of the LLP Act, 2008 and notification G.S.R. 110(E) of 11 February 2022. Guidance, not legal advice for your particular LLP.