CA Sansaar
Govt plans to restrict auditors from offering non-audit services
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The Corporate Laws (Amendment) Bill, 2026, introduced in late March, proposes a strict three-year cooling-off period preventing auditors from providing non-audit services after their tenure.
These auditors, while opposing the rule, said that such restrictions don’t exist anywhere else in the world, and would result in service quality deterioration as companies will have to rely on lower-tier firms to deliver crucial services like tax advisory, internal audits and consulting.
As per the Bill, which has been referred to the joint parliamentary committee (JPC) for detailed scrutiny, Section 144 of the Companies Act will be amended to include a new provision that prohibits auditors or audit firms from giving non-audit services to a company or its subsidiary for a period of three years after their term as statutory auditor has completed. In India, mandatory rotations of statutory auditors after every five years and audit firms after every 10 years are provided under Section 139(2) of the Companies Act.
These auditors, while opposing the rule, said that such restrictions don’t exist anywhere else in the world, and would result in service quality deterioration as companies will have to rely on lower-tier firms to deliver crucial services like tax advisory, internal audits and consulting.
As per the Bill, which has been referred to the joint parliamentary committee (JPC) for detailed scrutiny, Section 144 of the Companies Act will be amended to include a new provision that prohibits auditors or audit firms from giving non-audit services to a company or its subsidiary for a period of three years after their term as statutory auditor has completed. In India, mandatory rotations of statutory auditors after every five years and audit firms after every 10 years are provided under Section 139(2) of the Companies Act.
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