The resignation statement is the auditor's separate duty
Section 140(2) of the Companies Act, 2013 requires the resigning auditor to file the prescribed statement within thirty days of resignation with the company and Registrar, and additionally with CAG for the stated section 139(5) company population, indicating reasons and relevant facts. Checked on 28 October 2026, this guide focuses on the standard subsection (3) penalty working. The company's section 139 replacement-appointment steps do not by themselves discharge the auditor's statement obligation. ICSI official Act text: section 140(2)–(3), including the current cap amendment.
Identify the legally relevant resignation and actual compliance
Retain the operative resignation, its date and evidence of the prescribed statement's filing with each required recipient. A Board's later noting date is not automatically a new resignation date. A resignation letter and the prescribed filing are different records. Where filing status is uncertain, obtain the actual acknowledgment rather than assuming that a professional handover email is sufficient. Check the current prescribed form and filing requirements independently before submission; these arithmetic models do not reproduce a portal form or invent a filing acknowledgment. ICSI official Act text: section 140(2)–(3), including the current cap amendment.
Use the current standard base and total cap
Section 140(3) starts with ₹50,000 or the auditor's remuneration, whichever is less. Continuing failure adds ₹500 for each day after the first during which the failure continues, subject to the current ₹2 lakh maximum. The official text records the amendment from the older ₹5 lakh cap; do not reuse that historical ceiling as current. Identify the remuneration amount relevant to the actual case rather than assuming every fee on every engagement belongs to this statutory base. ICSI official Act text: section 140(2)–(3), including the current cap amendment.
Count continuing failure without charging the first day twice
First establish the end of the lawful filing period and the actual duration of failure. The examples define D as the number of established failure days, including the first; on that premise the standard arithmetic is the lesser of ₹2 lakh and the base plus ₹500 times D minus one. The trigger day, filing due date and first failure day are separate facts. The models do not add thirty lawful filing days to the penalty day count. ICSI official Act text: section 140(2)–(3), including the current cap amendment.
Separate the model from the adjudicated result
These are standard unreduced statutory models on stipulated facts, not an assertion that every case produces an identical final order. Review any independently applicable statutory reduction, company/person classification, adjudication procedure, appeal and the actual remuneration/day-count findings. Filing fees, additional filing fees and other distinct liabilities are not automatically included in this penalty calculation. Do not treat a spreadsheet estimate as proof that the default is cured or an official order has been paid. ICSI official Act text: section 140(2)–(3), including the current cap amendment.
Close both compliance and monetary evidence
Maintain a calendar with resignation, filing deadline, actual filings, first failure day, last counted day, remuneration basis, base, increment and cap. Link the eventual order, payment and filing acknowledgment separately. Correcting the underlying filing and satisfying a monetary order are different completion checks. This record also prevents the separate incoming-auditor appointment calendar from being mistakenly used as the outgoing auditor's filing evidence. ICSI official Act text: section 140(2)–(3), including the current cap amendment.
Applicable primary references
ICSI official Act text: section 140(2)–(3), including the current cap amendment
Six worked illustrations
All facts and amounts below are fictional. Assumptions describe the model, not additional statutory rules.
Illustrative example 1: Remuneration below the base ceiling
Assume relevant remuneration ₹20,000 and one established failure day. Base is the lower of ₹50,000 and ₹20,000 = ₹20,000. There are no days after the first, so the standard model is ₹20,000.
Illustrative example 2: Base ceiling with a higher fee
Assume relevant remuneration ₹80,000 and one failure day. The base is ₹50,000, not ₹80,000, and the standard result remains ₹50,000 before any separately applicable reduction.
Illustrative example 3: Ten failure days
Assume remuneration ₹20,000 and D = 10. Nine days after the first add ₹4,500. Standard total is ₹24,500, not ₹25,000 from incorrectly charging all ten days again.
Illustrative example 4: Longer continuing failure
Assume remuneration ₹80,000 and D = 31. Base ₹50,000 plus 30 × ₹500 = ₹15,000 gives ₹65,000. The thirty-day filing allowance is not added again to D.
Illustrative example 5: Apply the current cap
Assume remuneration ₹1,00,000 and D = 401. Uncapped arithmetic is ₹50,000 + 400 × ₹500 = ₹2,50,000. The standard statutory model is capped at ₹2,00,000, not the obsolete ₹5 lakh maximum.
Illustrative example 6: Find the cap crossover
Assume base ₹50,000. With D = 300, the result is ₹1,99,500. At D = 301, 300 incremental days produce ₹2,00,000. Further continuing days do not increase this standard capped model, although compliance remains necessary.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Identify the auditor and resignation | Operative document and legal effective date |
| 2 | Determine required recipients | Company, Registrar and applicable CAG population |
| 3 | Verify the prescribed filing requirements | Current form/process and required statement facts |
| 4 | Diary the thirty-day period | Established trigger and applicable counting rules |
| 5 | Obtain actual compliance evidence | Acknowledgment for each required submission |
| 6 | Establish the failure period | First failure day and last counted day |
| 7 | Support the remuneration base | Relevant engagement and amount determination |
| 8 | Calculate standard increments and cap | Days after first and current ₹2 lakh ceiling |
| 9 | Review separate relief and adjudication | Applicable statutory reductions, procedure and actual order |
| 10 | Close filing and payment independently | Cure evidence, order/payment and preserved calendar |
Sixteen practitioner FAQs
1. Who owes the section 140(2) statement duty?
The resigning auditor.
2. Is replacement appointment the same obligation?
No. It is a separate company process.
3. What period does subsection (2) specify?
Thirty days from resignation.
4. Must the statement indicate reasons and relevant facts?
Yes, as specified in the section.
5. Can CAG be an additional recipient?
For the stated section 139(5) population, yes.
6. Does a later Board noting date automatically restart time?
No. Establish the operative resignation date.
7. Is a handover email necessarily filing proof?
No. Obtain the actual required acknowledgment.
8. What is the standard base?
₹50,000 or auditor remuneration, whichever is less.
9. Is every unrelated professional fee automatically included?
Determine the legally relevant remuneration amount.
10. What is the continuing-day increment?
₹500 for each day after the first of continuing failure.
11. Do thirty lawful filing days count as failure days?
They should not simply be added to the established default count.
12. What current standard total cap is used?
₹2 lakh under the operative subsection (3).
13. Should the historic ₹5 lakh cap be reused?
No. The official text records its replacement.
14. Do these models determine every final adjudicated amount?
No. Actual findings and independently applicable relief need review.
15. Are filing fees automatically part of this penalty?
They are separate amounts requiring their own basis.
16. What demonstrates completion?
Both the filing evidence and any separately required monetary compliance.
Conclusion
Separate the auditor’s resignation statement from the company’s replacement appointment, then calculate the standard penalty using remuneration, continuing days and the current cap.