Section 142 of the Companies Act, 2013
Section 142 of the Companies Act, 2013
– Remuneration of Auditors
📜 Bare Act Text (Simplified):
Section 142(1): The remuneration of the auditor of a company shall be fixed in the general meeting or in such manner as determined therein.
➤ In the case of the first auditor, appointed by the Board under Section 139(6), the Board may fix the remuneration.
Section 142(2): The remuneration shall include the audit fees, expenses incurred by the auditor in performing his duties, and any facility extended to him.
➤ However, it does not include any remuneration paid for other services rendered by the auditor at the company's request.
✅ Key Points / Summary:
| Topic | Explanation |
|---|---|
| Who decides audit fees? | Members in the general meeting (usually AGM), unless otherwise specified. |
| First auditor's fees? | Decided by the Board of Directors. |
| What does remuneration include? | Audit fees, out-of-pocket expenses, facilities (if any). |
| What is excluded? | Payment for non-audit services (e.g., consulting, tax filing) is not included in audit remuneration under this section. |
🧾 Example:
XYZ Ltd. appoints its first auditor – the Board will decide the auditor’s fees.
For future years, auditor fees are approved in the AGM.
If the auditor also provides GST filing services, that fee is not covered under Section 142(2).
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