The Ministry of Corporate Affairs (MCA) has updated the criteria for small companies. The revision came into effect on December 1, 2025. The change was made through an amendment to Rule 2(1)(t) of the Companies (Specification of Definition Details) Rules, 2014.

Under the new criteria, a small company is defined as a company, other than a public company, whose:

• Paid-up capital: Does not exceed INR10 crore
• Turnover: Does not exceed INR100 crore for the previous financial year

This increase in thresholds is aimed at reducing compliance burdens and making it easier for more businesses to qualify as small companies under the law.

Exclusions from Small Company Criteria

Certain companies remain outside the small company classification. These include:

• Holding or subsidiary companies
• Companies registered under Section 8
• Companies governed by any special Act
• Public companies

Previously, the limits were INR 4 crore for paid-up capital and INR 40 crore for turnover. The revision significantly increases the number of companies that can qualify as small companies.

Compliance Relief and Benefits

The revised criteria reduce compliance burdens for eligible companies. Key advantages include:

• Annual returns can be signed by a director if no company secretary is present
• Only two board meetings are required each year
• Filing of abridged annual returns is allowed
• Small companies are exempt from preparing a cash flow statement
• Lower penalties for non-compliance

This update is expected to provide relief to many small businesses and support easier corporate governance.

The MCA’s revision of small company criteria is a major step for corporate India. Higher paid-up capital and turnover limits ease compliance, reduce penalties, and encourage small businesses to formalize and grow.