MCA Details Enhanced Small Company Thresholds Up to ₹10 Crore Capital and ₹100 Crore Turnover
In a Rajya Sabha reply to Unstarred Question No. 229 answered on 21 July 2026, the Ministry of Corporate Affairs stated that the Government has progressively enhanced the financial thresholds for classification of “small companies” under section 2(85) of the Companies Act, 2013 to reduce compliance burden and improve ease of doing business. The thresholds increased from paid-up share capital of ₹50 lakh and turnover of ₹2 crore under the Companies Act, 2013, to ₹2 crore and ₹20 crore through Notification No. G.S.R. 92(E) dated 1 February 2021 (effective 1 April 2021), then to ₹4 crore and ₹40 crore through Notification No. G.S.R. 700(E) dated 15 September 2022, and most recently to ₹10 crore and ₹100 crore through Notification No. G.S.R. 880(E) dated 1 December 2025. The reply states that more companies would receive the benefits available to small companies, including optional cash flow statements, abridged annual returns and Board’s Reports, exemptions relating to auditor rotation, auditor reporting and CARO 2020, reduced board meeting requirements, mergers through Regional Director approval, lesser penalties, exemptions from pre-certification of forms, lower fees, and zero incorporation fee in specified cases.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
RAJYA SABHA
UNSTARRED QUESTION NO. 229
ANSWERED ON TUESDAY, JULY 21, 2026
ENHANCEMENT OF THRESHOLD LIMITS FOR CLASSIFICATION OF SMALL COMPANIES
QUESTION
229. Shri Naresh Bansal:
Dr. Kavita Patidar:
Shri Masthan Rao Yadav Beedha:
Shri Rajinder Gupta:
Shri Lahar Singh Siroya:
Shri S. Selvaganabathy:
Will the Minister of CORPORATE AFFAIRS
be pleased to state:
A. whether Government has enhanced the threshold limits for classification of companies as “small companies” under the Companies Act, 2013 in order to reduce compliance burden and promote ease of doing business; and
B. if so, the details of the changes made in the threshold for paid-up share capital and turnover since 2014, including expected benefit from such changes?
ANSWER
THE MINISTER OF STATE IN THE MINISTRY OF CORPORATE AFFAIRS AND MINISTER OF STATE IN THE MINISTRY OF ROAD, TRANSPORT AND HIGHWAYS
[SHRI HARSH MALHOTRA]
(a) & (b): The Government of India has progressively enhanced the financial threshold limits for classifying companies as “small companies” under section 2(85) of the Companies Act, 2013, to reduce compliance burden and improve the Ease of Doing Business for smaller businesses.
When Companies Act, 2013 was enacted, a small company was defined as having a paid-up share capital not exceeding Rs. 50 lakh and a turnover not exceeding Rs. 2 crore, excluding certain classes of companies. Subsequently, vide Notification No. G.S.R. 92(E) dated February 1, 2021, the Companies (Specification of Definitions Details) Rules, 2014 were amended w.e.f. April 1, 2021 to increase the paid-up capital limit to Rs. 2 crore and the turnover limit to Rs. 20 crore. These limits were raised again vide Notification No. G.S.R. 700(E) dated September 15, 2022, to Rs. 4 crore for paid-up capital and Rs. 40 crore for turnover.
Recently, vide Notification No. G.S.R. 880(E) dated December 1, 2025, the government further enhanced these thresholds, establishing the revised limits at a paid-up capital of up to Rs. 10 crore and a turnover of up to Rs. 100 crore. In view of the enhanced thresholds, more companies would get the benefits of small companies, the details thereof are at Annexure-I.
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Annexure-I
Annexure-I to the Rajya Sabha Unstarred Q. No. 229 part (a) & (b) to be answered on 21st July, 2026
Some of the important steps taken by MCA for ease of doing business and to ease compliance burden for small companies
| Sr. No. |
Section | Subject | Provisions in the Company Act, 2013 to support small companies |
| 1. | 2 (40) proviso | Financial Statement | Requirement of cash flow statement to be part of financial statement made optional. |
| 2. | 92(1) Proviso | Annual return | (i) Shall be signed by a company secretary or where is there is no company secretary by a Director of the company.
(ii)Abridged annual return prescribed for small companies. |
| 3. | 92(1)(g) | Disclosure in annual return about remuneration of directors | Disclosure as to aggregate of amount of remuneration drawn by directors adequate for small companies. |
| 4. | 134(3A) | Board’s Report | Abridged Board Report prescribed for small companies. |
| 5. | 139(2) read with rule 5 of Companies (Audit and Auditors) rules, 2014 | Rotation of auditors | Rotation of auditors in small companies is not mandatory. |
| 6. | 141(3)(g) | Restriction on auditor- ships | Restriction w.r.t. maximum auditor-ships not applicable to auditors of small companies. |
| 7. | 143(3)(i) | Disclosure in Auditors report on internal financial controls | These disclosures are not applicable for small companies. |
| 8. | 173 (5) | Meetings of Board. |
Under Companies Act, 2013, Board of Directors of a company are required to meet at least once in 120 days, 4 board meetings in a year. However, in case of a small company, one board meeting in each half of a calendar year with a gap between two meetings of not less than 90 days is sufficient to comply with the requirement of section 173(5) of the Companies Act. |
| 9. | 233 | Merger through approval of RD |
Mergers between two or more small companies or between one or more start-up company with one or more small company allowed through approval of RD. |
| 10. | 446B | Lesser penalties | Small companies are entitled for lesser penalties as per section 446B. |
| 11. | Rule 8(12)(a) | Companies (Registration offices and Fees) amendment Rules, 2014 | Small companies are exempted from requirements w.r.t. pre-certification of forms by professionals. |
| 12. | Annexure- Table of fees | Companies (Registration offices and Fees) amendment Rules, 2014 | Lesser fees allowed for small companies. |
| 13. | Clause 1(2)(iv) | Companies (Auditor’s Report) Order, 2020 (CARO 2020) | The Companies (Auditor’s Report) Order (CARO) 2020 is not applicable on small companies |
| 14. | Incorporation of small companies | Zero fee is charged for incorporation of all companies with authorized capital up to Rs. 15 lakh or with up to 20 members where no share capital is applicable. |
