In short
Applies to: Machining, casting, forging, sheet-metal and assembly units supplying vehicle and equipment makers, and job workers for them
- Whether the Companies (Cost Records and Audit) Rules, 2014 apply depends on the tariff heading of what the company makes.
- From 1 April 2025 an enterprise is classed as micro, small or medium by its investment and its turnover.
- Companies with turnover above ₹250 crore have to be on a TReDS (Trade Receivables Discounting System) platform, where a supplier can discount its invoices.
This is the reference detail behind our Engineering and Auto Components page: GST, cost records and cost audit, MSME rules, and and .
Component makers around Chennai, Ranipet and Hosur sell to buyers who fix the price, ask for a reduction every year and schedule deliveries by the day. Profit depends on knowing the cost of each part: machine time, material yield, rejections and tooling.
GST
| Item | GST |
|---|---|
| Parts of motor vehicles | 18% on all auto parts from 22 September 2025; some were at 28% before |
| Job work on engineering goods | 18% |
Tooling supplied by the customer. Moulds and dies that the vehicle maker owns and sends free of charge are not added to the value of the parts, where the contract makes tooling the customer's responsibility. Where the contract makes tooling the supplier's responsibility and the customer provides it free, its cost, spread over the parts, is added to their value. The contract wording decides which applies.
Cost records and cost audit
Whether the Companies (Cost Records and Audit) Rules, 2014 apply depends on the tariff heading of what the company makes. Iron and steel products, base metals, machinery and mechanical appliances, electrical machinery, rubber and plastics are listed. Motor vehicle parts classified under heading 8708 are not. For a listed product:
| Requirement | The company's overall turnover in the previous year | Turnover from the listed products |
|---|---|---|
| Cost records | ₹35 crore or more | Not applicable |
| Cost audit | ₹100 crore or more | ₹35 crore or more |
- Companies earning more than 75% of revenue from exports in foreign exchange, operating from a special economic zone, or generating electricity for captive use are exempt from cost audit.
- Micro and small enterprises are outside the cost-records rule.
The Cost Audit Applicability Checker works through the tests, and the cost audit page sets out the forms and dates.
MSME rules, as supplier and as buyer
From 1 April 2025 an enterprise is classed as micro, small or medium by its investment and its turnover.
| Classification | Investment | Turnover |
|---|---|---|
| Micro | Up to ₹2.5 crore | Up to ₹10 crore |
| Small | Up to ₹25 crore | Up to ₹100 crore |
| Medium | Up to ₹125 crore | Up to ₹500 crore |
Micro and small suppliers have to be paid within the agreed period, and never more than 45 days after acceptance, or within 15 days where nothing was agreed in writing. A buyer who pays late can claim the expense only in the year of payment (Section 37(2)(g), earlier ).
Companies with turnover above ₹250 crore have to be on a (Trade Receivables Discounting System) platform, where a supplier can discount its invoices. The MSME Payment Checker works out the dates for an invoice. The article on the MSME 45-day payment rule explains the rule in full.
TDS and TCS
| Payment or sale | Tax at source |
|---|---|
| Job-work charges on material you supplied | TDS of 1% to individuals and HUFs (Hindu undivided families), 2% to others, once a single payment passes ₹30,000 or the year's total passes ₹1 lakh (Section 393(1), earlier 194C) |
| Purchases of goods, where your own turnover last year was over ₹10 crore | TDS of 0.1% of purchases from a supplier above ₹50 lakh in the year (Section 393(1), earlier 194Q) |
| Sale of scrap | TCS of 2% collected from the buyer (Section 394), unless the buyer gives a declaration in Form 127 that it is for use in manufacture |
The TDS & TCS Checker works out the rate and dates for a payment or sale.
Before relying on this article
The law this article follows: GST as amended from 22 September 2025, the Income-tax Act, 2025 and the Companies (Cost Records and Audit) Rules, 2014.
Rates and limits change with each Finance Act and GST notification.
This article is a summary for planning, not advice for a particular unit. Cost-record coverage in particular depends on how each product is classified.
Sources
- GST Council, 56th meeting: rate changes from 22 September 2025
- Notification 9/2025-Integrated Tax (Rate): GST rate schedules from 22 September 2025, CBIC
- CBIC Circular 47/21/2018-GST: moulds and dies supplied free by the customer
- Companies (Cost Records and Audit) Rules, 2014, Ministry of Corporate Affairs
- Revised MSME classification from 1 April 2025: notification S.O. 1364(E), Ministry of MSME
- Budget 2024-25 announcement lowering the TReDS onboarding threshold to ₹250 crore, Press Information Bureau
- Form 127 FAQs, Income Tax Department
- Section 393 of the Income-tax Act, 2025: TDS tables, Income Tax Department
This article is for general information only and does not constitute professional advice. Please consult a qualified professional before acting on it.
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