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act 024 of 1997 : Cost Accounting Records (Telecommunication Industry) Rules, 2011

Cost Accounting Records (Telecommunication Industry) Rules, 2011

ACTNO. 24 OF 1997
07 December, 2011

Section 1. Short title and commencement

(1) These rules may be called the Cost Accounting Records (Telecommunication Industry) Rules, 2011.

(2) They shall come into force on the date of their publication in the Official Gazette.

Section 2. Definitions and Interpretations

In these rules, unless otherwise requires,

(a) Act means the Companies Act, 1956 (1 of 1956);

(b) compliance report means the compliance report duly authenticated and signed by a cost accountant in the specified form of compliance report;

(c) Cost Accountant for the purpose of these rules means a cost accountant as defined in clause (b) of sub-section (1) of Section 2 of the Cost and Works Accountants Act, 1959 (23 of 1959) and who is either a permanent employee of the company or holds a valid certificate of practice under sub-section (1) of Section 6 and who is deemed to be in practice under sub-section (2) of Section 2 of that Act and includes a firm of cost accountants;

(d) Cost Accounting Standards means the standards of cost accounting, issued by the Institute;

(e) cost records means books of account relating to utilization of materials, labour and other items of cost as applicable to the production, processing, manufacturing or mining activities of the company;

(f) Form-A means the form specified in these rules for filing compliance report and other documents with the Central Government in the electronic mode;

(g) Form-B means the form of the compliance report and includes Annexure to the compliance report;

(h) Generally Accepted Cost Accounting Principles means the principles of cost accounting issued by the Institute;

(i) Institute means the Institute of Cost and Works Accountants of India constituted under the Cost and Works Accountants Act, 1959 (23 of 1959);

(j) product means any tangible or intangible goods, material, substance, article, idea, know-how, method, information, object, service, etc. that is the result of human, mechanical, industrial, chemical, or natural act, process, procedure, function, operation, technique, or treatment and is intended for use, consumption, sale, transport, store, delivery or disposal;

(k) product group in relation to tangible products means a group of homogenous and alike products, produced from same raw materials and by using similar or same production process, having similar physical or chemical characteristics and common unit of measurement, and having same or similar usage or application; and in relation to intangible products means a group of homogenous and alike products or services, produced by using similar or same process or inputs, having similar characteristics and common unit of measurement, and having same or similar usage or application;

(l) telecommunication activities means any act, process, procedure, function, operation, technique, treatment or method employed in relation to telecasting, broadcasting, telecommunicating voice, text, picture, information, data or knowledge through any mode or medium and includes intermediate and allied activities thereof and these activities would, inter alia, include the following services or activities, including such services that require license or registration with the Ministry of Communications and Information Technology, Government of India, namely

(i) Basic Telephone Services;

(ii) National Long Distance Services;

(iii) International Long Distance Services;

(iv) Cellular Mobile Telephone Services;

(v) Wireless Local Loop (WLL) (Fixed or Mobile) Telephone Services;

(vi) Very Small Aperture Terminal Services;

(vii) Public Mobile Radio Trunk Services;

(viii) Global Mobile Personal Communication Services;

(ix) Internet or Broadband or Wireless Access Service;

(x) Infrastructure Provider (IP-1);

(xi) Passive Telecom Infrastructure including Telecom Tower Facilities;

(xii) Cable Landing Stations; and

(xiii) Any other related, allied, intermediate or support services in relation to telecommunication activities not indicated above.

(m) turnover means total turnover made by the company from the sale or supply of all products or services during the financial year and it includes any turnover from job work or loan license operations and the subsidies or grants or incentives received but does not include any non-operational income;

(n) all other words and expressions used in these rules but not defined, and defined in the Act and rules made under clause (d) of sub-section (1) of Section 209 of the Act shall have the same meanings as assigned to them in the Act or rules, as the case may be.

Section 3. Application

These rules shall apply to every company, including a foreign company as defined under Section 591 of the Act, which is engaged in the production, processing, manufacturing, or rendering of telecommunication activities and wherein, the aggregate value of net worth as on the last date of the immediately preceding financial year exceeds five crores of rupees; or wherein the aggregate value of the turnover made by the company from sale or supply of all products or activities during the immediately preceding financial year exceeds twenty crores of rupees; or wherein the company's equity or debt securities are listed or are in the process of listing on any stock exchange, whether in India or outside India:

Provided that these rules shall not apply to a body corporate governed by any special Act.

Section 4. Maintenance of records

(1) Every company to which these rules apply, including all units and branches thereof shall, in respect of each of its financial year commencing on or after the date of this notification, keep cost records and the books of account so maintained shall contain, inter-alia, the particulars specified in Pro forma A to H mentioned in the Schedule annexed to these rules.

(2) The cost records referred to in sub-rule (1) shall be kept on regular basis in such manner so as to make it possible to calculate per unit cost of production or cost of operations, cost of sales and margin for each of its products and activities for every financial year on monthly or quarterly or half-yearly or annual basis.

(3) The cost records shall be maintained in accordance with the generally accepted cost accounting principles and cost accounting standards issued by the Institute; to the extent these are found to be relevant and applicable and the variations, if any, shall be clearly indicated and explained.

(4) The cost records shall be maintained in such manner so as to enable the company to exercise, as far as possible, control over the various operations and costs with a view to achieve optimum economies in utilization of resources and these records shall also provide necessary data which is required to be furnished under these rules.

(5) All such cost records and cost statements, maintained under these rules shall be reconciled with the audited financial statements for the financial year specifically indicating expenses or incomes not considered in the cost records or statements so as to ensure accuracy and to reconcile the profit of all product groups with the overall profit of the company and the variations, if any, shall be clearly indicated and explained.

(6) All such cost records, cost statements and reconciliation statements, maintained under these rules, relating to a period of not less than eight financial years immediately preceding a financial year or where the company had been in existence for a period less than eight years, in respect of all the preceding years shall be kept in good order.

(7) Every person, referred to in sub-sections (6) and (7) of Section 209 of the Companies Act, 1956 (1 of 1956), shall take all reasonable steps to secure compliance by the company with the provisions of these rules in the same manner as he is liable to maintain accounts required under sub-section (1) of Section 209 of the said Act.

Section 5. Form of the Compliance Report

Every company to which these rules apply shall submit a compliance report, in respect of each of its financial year commencing on or after the date of this notification, duly certified by a Cost Accountant, along with the Annexure to the Central Government, in the specified form.

Section 6. Time limit for submission of Compliance Report

Every company shall submit the compliance report referred to in Rule 5 to the Central Government within a period of one hundred and eighty days from the close of the company's financial year to which the compliance report relates.

Section 7. Authentication of Annexure to the Compliance Report

The Annexure to the compliance report shall be approved by the Board of Directors and certified by the Cost Accountant before submitting the same to the Central Government by the company.

Section 8. Penalties

(1) If default is made by the Cost Accountant in complying with the provisions of these rules, he shall be punishable with fine, which may extend to five thousand rupees.

(2) For contravention of these rules,

(a) the company shall be punishable as provided under sub-section (2) of Section 642 of the Act; and

(b) every officer thereof who is in default, including the persons referred to in sub-section (6) of Section 209 of the Act, shall be punishable as provided under sub-sections (5) and (7) of Section 209 of Companies Act, 1956 (1 of 1956).

Section 9. Savings

The supersession of the Cost Accounting Records (Telecommunications) Rules, 2002, shall not in any way affect

(a) any right, obligation or liabilities acquired, accrued or incurred thereunder;

(b) any penalty, forfeiture or punishment incurred in respect of any contravention committed thereunder; and

(c) Any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid, and; any such investigation, legal proceeding or remedy may be instituted, continued or enforced and any such penalty, forfeiture or punishment may be imposed as if those rules had not been superseded.

Form A

Form for filing Compliance Report and other documents with the Central Government

[Pursuant to Section 209(1)(d), 600(3)(b) of the Companies Act, 1956 and Rule 2 of the Cost Accounting Records (Telecommunication Industry) Rules, 2011]

Part I

General Information

Note: All fields marked in * are to be mandatorily filled.

1.

(a)

*Corporate identity number (CIN) or foreign company registration number of the company

Pre-Fill

(b)

Global location number (GLN) of company

2.

(a)

*Name of the company

(b)

*Address of the registered office or of the principal place of business in India of the company

(c)

*E-mail Address of the company

3.

(a)

*Financial year covered by the compliance report

From (DD/MM/YYYY)

To (DD/MM/YYYY)

(b)

*Date of Board of directors' meeting in which annexure to the compliance report was approved

(DD/MM/YYYY)

4.

Details of the cost accountant

(a)

*Category of the cost accountant

Individual Cost accountant's firm

(b)

In case of individual, whether the cost accountant is in permanent employment of the company or in practice

In Employment In Practice

(c)

*Name of the cost accountant or the cost accountant's firm who has certified the cost records of the company

(d)

*Income tax permanent account number of the cost accountant or the cost accountant's firm

(e)

*Membership number of cost accountant or cost accountant's firm's registration number

(f)

Address of the cost accountant or cost accountant's firm

(i) Line I

Line II

(ii) City

(iii) State

(iv) Country

(v) Pin Code

(g)

*E-mail ID of the cost accountant or cost accountant's firm

5.

*Quantitative Information

Sl. No.

Name of the Product or Service Group

Unit

Annual Production (Quantity)

Net Sales

(Quantity)

(Value in Rupees)

A

Produced or Manufactured Product Groups

1.

2.

3. etc.

B

Services Groups

1.

2.

3. etc.

C

Trading Activities (Product Group-wise)

1.

2.

3. etc.

D

Other Income

Total Income as per Financial Accounts

Part II

Attachments:

1.

Compliance report as per the Cost Accounting Records (Telecommunication Industry) Rules, 2011.

Attach

2.

Optional attachments(s)-if any

Attach

List of attachments

Remove attachment

Verification

To the best of my knowledge and belief, the information given in this form and its attachments is correct and complete.

I have been authorized by the Board of directors' resolution number to sign and submit this form.

dated

(DD/MM/YYYY)

I am authorized to sign and submit this form.

To be digitally signed by:

Managing Director or director or manager or secretary (in case of an Indian company) or an authorized representative (in case of a foreign company)

Digital Signatures

*Designation

*Director identification number of the Director or Managing Director;

or Income-tax PAN of the Manager or of authorized representative; or membership number, if applicable or income-tax PAN of the Secretary (Secretary of a company who is not a member of ICSI may quote his/her income-tax PAN)

Director of the company

Digital Signatures

Director identification number of the director

Modify

Check Form

Pre-scrutiny

Submit

This e-form has been taken on file maintained by the Central Government through electronic mode and on the basis of statement of correctness given by the filing company

Form B
Form of Compliance Report

[See Rule 2 and Rule 5]

I or We being in permanent employment of the company or in practice, and having been appointed as cost accountant under Rule 5 of the Cost Accounting Records (Telecommunication Industry) Rules, 2011 of .. (mention name of the company) having its registered office at ..(mention registered office address of the Company) (hereinafter referred to as the company), have examined the books of account prescribed under clause (d) of sub-section (1) of Section 209 of the said Act, and other relevant records for the period/year (mention the financial year) and certify as under:

1.

I or We have or have not obtained all the information and explanations, which to the best of my or our knowledge and belief were necessary for the purpose of this compliance report.

2.

In my or our opinion, proper cost records, as per the Cost Accounting Records (Telecommunication Industry) Rules, 2011 prescribed under clause (d) of sub-section (1) of Section 209 of the Companies Act, 1956, have or have not been maintained by the company so as to give a true and fair view of the cost of production or operation, cost of sales and margin of all the products and activities of the company.

3.

Detailed unit-wise and product or activity-wise cost statements and schedules thereto in respect of the product groups or activities are or are not kept in the company.

4.

In my or our opinion, the said books and records give or do not give the information required by the Companies Act, 1956 in the manner so required.

5.

In my or our opinion, the said books and records are or are not in conformity with the generally accepted cost accounting principles and cost accounting standards issued by The Institute of Cost and Works Accountants of India, to the extent these are found to be relevant and applicable.

Dated: this day of 20 at (mention name of place of signing this report)

Signature and Seal of the Cost Accountant(s)

Membership Number(s)

Notes:

(i)

Delete words not applicable.

(ii)

If as a result of the examination of the books of account, the cost accountant desires to point out any material deficiency or give a qualified report, he shall indicate the same against the relevant para.

(iii)

Briefly give your observations and suggestions, if any, relevant to the maintenance of cost accounting records by the company.

(iv)

Cost accountant may use separate sheet(s) for (ii) and (iii) above, if required.

ANNEXURE TO THE COMPLIANCE REPORT

[See Rule 2 and Rule 5]

1.

General:

(a)

Name of the company:

(b)

Registered office address:

(c)

Financial year to which the Compliance Report relates.

2.

Quantitative information:

Sl. No.

Name of the Product or Service Group

Unit

Annual Production (Qty.)

Net Sales

(Qty.)

(Value in Rupees)

A

Produced or Manufactured Product Groups

1.

2.

3. etc.

B

Services Groups

1.

2.

3. etc.

C

Trading Activities (Product Group-wise)

1.

2.

3. etc.

D

Other Income

Total Income as per Financial Accounts

3.

Reconciliation Statement:

Net Margin (Profit or Loss) as per Cost Accounts

(In Rupees)

A. From Produced or Manufactured Product Groups

B. From Services Groups

C. From Trading Activities

Total as per Cost Accounts

Add: Incomes not considered in Cost Accounts (if any)

Less: Expenses not considered in Cost Accounts (if any)

Add/Less: Difference in Stock Valuation

Profit or (Loss) as per Financial Accounts

Notes:

(i)

For produced or manufactured product groups, use the nomenclature as used in the Central Excise Act or Rules, as applicable.

(ii)

For services groups, use the nomenclature as used in the Finance Act or Central Service Tax Rules, as applicable.

Signature

Name

Cost Accountant (S)

Membership Number (S)

Seal

Date

[See Rule 4]

Pro forma A

Service-wise Costing Profit and Loss Statement

Name of the Company:

Name of Service:

Licensed Area (if any)

Period:

(Rs In Lacs)

Particulars

Current Year

Previous Year

Revenue (Net of Taxes)

Sales or Services

Advertisement

Content Sale

Rentals

Others (specify)

Total Revenue

A. Employee cost:

Salaries, Wages, Incentives and Allowances

Contribution to Provident fund etc.

Staff Welfare Expenses

Medical Expenses

Training and Recruitment

Others

Sub-total (A)

B. Administration cost:

Rent (Other than Switching and Cell sites rent)

Rates and taxes

Insurance charges (Other than Network Elements)

Communication costs

Electricity

Travelling and conveyance expenses

Legal and professional charges

Printing and Stationery

Audit fees

Maintenance

Office Building

Others

Outsourcing Charges

Billing Services

Other administrative activities

Others

Sub-total (B)

C. Sales and Marketing cost:

Advertisement and sales promotion expenses

Sales commission and Incentive

Provision for bad and doubtful debts

Bad debts write off

Outsourcing Charges for customer care services

Others

Sub-total I

D. Government charges:

License fee

License fee penalty, if any

WPC Charges

Radio Spectrum charges

Microwave charges

Others

Sub-total (D)

E. Depreciation:

Buildings

Plant and Machinery

Others

Sub-total (E)

F. Leased Rentals:

Equipment

Real estate

IT related services

Customer Care

Others

Sub-total (F)

G. Network Operating cost:

Leased Circuits and Gateway Charges

Royalty or Fee for technical know how

Switching and Cell sites rent

Installation Charges

Maintenance Charges (New Elements)

Network Consumables and spares

Power and fuel

Interconnection:

(a) Pass Through Charges

(b) Port Charges

(c) Others

Passive Infrastructure Charges

Insurance Charges (Network Elements)

Outsourcing Charges

Others

Sub-total (G)

H. Other Cost:

Corporate office expenses

Common cost

Loss on sale of fixed assets (net)

Others

Sub-total (H)

I. Finance Charges:

Interest

Bank Charges

Others

Sub-total (I)

Total Cost (A to I)

Profit or (loss) before tax

Total Capital Employed

Return on Capital Employed (%)

Return on Turnover (%)

Pro forma B

Product or Network Service-Wise Costing Profit & Loss Statement

Name of the Company:

Name of Service:

Licensed Area (if any):

Period:

(Rs in Lacs)

Particulars

Products or Network Services against each service

A

B

C

etc.

Total

Revenue (Net of Taxes)

Sales or Services

Advertisement

Content Sale

Rentals

Others

Total Revenue

(I) Direct Cost:

A. Employee cost:

Salaries, Wages, Incentives and Allowances

Contribution to Provident fund etc.

Staff Welfare Expenses

Medical Expenses

Training and Recruitment

Others

Sub-total (A)

B. Administration cost:

Rent (Other than Switching and Cell sites rent)

Rates and taxes

Insurance charges (Other than Network Elements)

Communication costs

Electricity

Travelling and conveyance expenses

Legal and professional charges

Printing and Stationery

Audit fees

Maintenance

Office Buildings

Others

Outsourcing Charges

Billing Services

Other administrative activities

Others

Sub-total (B)

C. Sales and Marketing cost:

Advertisement and Sales promotion expenses

Sales commission and Incentive

Provision for bad and doubtful debts

Bad debts write off

Outsourcing Charges for customer care services

Others

Sub-total I

D. Government charges:

License fee

License fee penalty, if any

Expenses on amortization (one time entry fee)

WPC Charges

Radio Spectrum charges

Microwave charges

Others

Sub-total (D)

E. Depreciation:

Buildings

Plant and Machinery

Others

Sub-total (E)

F. Leased Rentals:

Equipment

Real estate

IT related services

Customer Care

Others

Sub-total (F)

Total Direct Cost (A+B+C+D+E+F)

(II) Network Element Operating Cost (as per Pro forma C )

X

Y

Z

Etc.

Total Network Element Operating Cost (II)

(III) Support Function or Department Cost (as per Pro forma D2 )

Total Support Function or Department Cost (III)

Total (I) + (II) + (III)

Capital Employed (as per Pro forma F)

Return on Capital Employed (%)

Return on Turnover (%)

Pro forma C

Cost Sheet - Network Elements

Name of the Company:

Name of Service:

Licensed Area (if any):

Period:

(Rs in Lacs)

Particulars

Network Elements

X

Y

Z

etc.

Total

(I) Network Direct Cost:

A. Employee cost:

Salaries, Wages, Incentives and Allowances

Contribution to Provident fund etc.

Staff Welfare Expenses

Medical Expenses

Training and Recruitment

Others

Sub-total (A)

B. Administration cost:

Rent (Other than Switching and Cell sites rent)

Rates and taxes

Insurance charges (Other than Network Elements)

Communication costs

Electricity

Travelling and conveyance expenses

Legal and professional charges

Printing and Stationery

Audit fees

Maintenance

Building

Others

Outsourcing Charges

Billing Services

Other administrative activities

Others

Sub-total (B)

C. Network Operating cost:

Leased Circuits and Gateway Charges

Royalty or Fee for technical know how

Rent (Network elements equipments and cell sites)

Power and fuel

Interconnection:

(i) Port charges

(ii) Others

Passive Infrastructure Charges

Outsourcing Charges for network element equipments

Others

Sub-total (C)

D Government charges:

WPC Charges - DOT (other than on revenue sharing)

Paid to Government agencies other than DOT

Sub-total (D)

E Depreciation

Building

Plant and Machinery

Others

Sub-total (E)

F Leased Rentals

Equipment

Real Estate

Others

Sub-total (F)

G Total Network Direct Cost (A+B+C+D+E+F)

H. Support Function cost as per Pro forma E

Sub Total H

Total (G+H)

*Pro forma D1

Apportionment of Support Functions to various Services

(For Pro forma D2 )

(Rs in Lacs)

Support Function or Department Cost

Basis of Apportionment to Sub-Service specify

Service 1

Service 2

Service 3

Service 4

etc.

Total

Administration

Billing

Branch Office

Corporate Office

Customer Care

Finance & Accounts

HR

Insurance

IT or EDP

Legal or Regulatory

Maintenance

Marketing and Sales

Planning and Development

Quality

Stores or Logistics

Total

Pro forma D2

Apportionment of Support Functions to various Products

(For Pro forma B )

(Rs in Lacs)

Support Function or Department Cost

Basis of subsequent apportionment to products specify

Service from Pro forma D1

Service from Pro forma D1

Total

Product 1

Product 2

etc.

Product 1

Product 2

etc.

Administration

Billing

Branch Office

Corporate Office

Customer Care

Finance & Accounts

HR

Insurance

IT or EDP

Legal or Regulatory

Maintenance

Marketing and Sales

Planning and Development

Quality

Stores or Logistics

Total

Pro forma E

Statement of Capital Employed

Name of the Company:

Name of Service:

Licensed Area (if any):

Period:

(Rs in Lacs)

Particulars

Network Elements

Total

X

Y

Z

etc.

Fixed Assets - (Gross Book Value)

Tangible Assets

Land

Building

Plant and Machinery

Computers

Office equipment

Furniture and fixtures

Vehicles

Others

Intangible Assets

License

Patents or technical know how

Total fixed assets

Less: Accumulated depreciation

Net Book Value (I)

Capital Work-in-Progress (II)

Current Assets

Inventories

Cash and bank balance

Debtors

Loans and advances

Others

Sub total

Current Liabilities

Sundry creditors

Other Liabilities

Provisions, etc.

Security deposit

Advance Rentals and Prepaid Card Revenue

Sub total

Net Working Capital (III)

Total Capital Employed (I+II+III)

Pro forma F

Statement of Allocation or Apportionment of Capital Employed to
Products or Network Services

Name of the Company:

Name of Service:

Licensed Area (if any):

Period:

(Rs in Lacs)

Particulars

Products or Network Services

A

B

C

etc.

Total

(a) Network element wise Capital Employed

Radio Network:

X

Y

Z

etc.

Subtotal (A)

(b) Support Function or Departments

Administration

Billing

Branch Office

Corporate Office

Customer Care

Finance and Accounts

HR

Insurance

IT or EDP

Legal or Regulatory

Maintenance

Marketing and Sales

Planning and Development

Quality

Stores or Logistics

Any Other Item (Specify)

Subtotal (b)

Total (a + b)

Pro forma G

Profit and Loss Reconciliation Statement

Name of the Company:

Period:

(Rs in Lacs)

Particulars

Revenue

Cost

Net Profit or (Loss)

Service 1

Service 2

Service 3

etc.

Total

Adjustments:

Return on capital employed on network elements

Non regulated business

Elimination of inter business transactions

Non relevant items:

- Return on investments

- Non operating income

- Interest costs and financial charges

- Corporate Tax

- Other taxes (if any)

- Amortization of Goodwill

- Extraordinary items - such as abnormal loss due to fire or theft etc.

- Others

Unallocated items

Any other items (specify)

Sub Total

Total as per Audited Accounts

Pro forma H

Capital Employed Reconciliation Statement

Name of the Company:

Period:

(Rs in Lacs)

Item

Capital employed

Service 1

Service 2

Service 3

etc.

Total

Adjustments:

For non regulated business

Elimination of inter business assets or liabilities

Non relevant items

- Investments

- Deposits-Inter corporate. etc.

- Goodwill

- Provision for tax

- Proposed dividend

- Long term borrowings

- Others:

(i) Unallocated items

(ii) Any other items (specify)

Sub total (B)

Total as per audited accounts (A B)

Notes:

1. Separate Pro forma shall be prepared for each service or product and network elements in the Pro forma prescribed for each area of operation or circle or licensed.

2. The cost shall be allocated or apportioned product wise as specified in appendix as far as possible.

3. Proper record shall be maintained explaining the basis of allocation or apportionment for various elements of cost in respect of product or service or network elements & supporting functions.

4. The items of the cost shown in the Pro forma are indicative and same shall be reflected keeping in mind the materiality of the item of the cost in the service or product or network service or network elements & support functions.

5. Capital Employed means average of net fixed assets (excluding intangible assets, effect of revaluation of fixed assets, and capital work in progress) plus net current assets existing at the beginning and close of the financial year.

1. Vide GSR 869(E), dt. 7-12-2011, published in the Gazette of India, Extra., Part II, Section 3(i), dated 7-12-2011, No. 657.