The new definition of a small company has changed how many Indian businesses manage compliance. This update increases the eligibility limits and gives more companies the benefit of simpler compliance rules. In this blog, we explain the revised limits, the changes announced in 2025, and how to know if your business qualifies as a small company.
The MCA has notified revised limits for small companies under Section 2(85). These changes aim to support more early stage and growing businesses with lower compliance pressure. As data seen in industry reports, many companies can reduce their annual burden by almost 40 percent once they fall under this category.
Based on the official amendment and the updated chart:
|
Particulars |
Earlier Limit (15 Sept 2022) |
Revised Limit (1 Dec 2025) |
|
Paid up Capital |
Up to 4 crore |
Up to 10 crore |
|
Turnover |
Up to 40 crore |
Up to 100 crore |
These updated limits replace the older 2 crore and 20 crore thresholds that were introduced in 2021. The Government continues to widen the scope so that more companies can enjoy a lighter compliance framework.
A company qualifies as a small company when:
Its paid up capital is 10 crore or less
Its turnover is 100 crore or less as per the latest audited financial statements
It is not a holding company or subsidiary company
It is not registered under Section 8
It is not a special class company notified by the Government
These rules are available on www.mca.gov.in and follow the definitions under Section 2(85).
Many founders often guess their classification, which leads to errors in annual filings. The simple way is to check two numbers from your audited financials.
Paid up capital
Turnover for the last financial year
If both numbers fall within the revised limit, your company qualifies. This helps you shift to MGT 7A and fewer board meetings which saves time during the year.
We see many clients who misunderstand their classification. So at Ebizfiling, we often guide them with a quick evaluation and correct filing format to avoid penalties. As seen in recent compliance cases, wrong classification leads to incorrect annual returns.
We review your paid up capital and turnover to confirm small company status
We guide you on the exact forms you must file as per the MCA rules
We prepare all documents including MGT 7A and financial statements
We manage your annual filings and complete ROC submissions on time
We keep your company compliant all year with reminders and guidance
The updated definition of a small company gives Indian founders a clear advantage. The new limits help more businesses reduce compliance, cost, and penalties. If you want to confirm your eligibility, Ebizfiling can guide you with a quick evaluation and help you file the right forms under the small company rules.
You can verify the update directly from the Government source, we have also attached the official MCA notification GSR 880(E) below.
Click Below to download the Free MCA Gazette Notification
MCA Gazette Notification on the New Definition of Small Company
A small company now includes businesses with paid-up capital up to ₹10 crore and turnover up to ₹100 crore. These revised limits apply from 1 December 2025 as per MCA.
No. Holding companies, subsidiary companies, Section 8 companies, and companies classified under special categories cannot qualify even if they meet the revised limits.
A small company must file its annual return in Form MGT-7A, which is a shorter and simplified version of the regular MGT-7.
A small company must hold at least two board meetings in one financial year with a minimum gap of 90 days between them.
No. Small companies are exempt from preparing a cash flow statement, making financial reporting simpler.
No. Internal audit is not required for small companies unless they fall under a notified special class.
Yes. Small companies enjoy significantly reduced penalties under Section 446B, lowering the compliance burden for founders.
Yes. Statutory audit applies to all companies, but small companies benefit from simplified reporting requirements.
The turnover mentioned in the latest audited financial statement is considered to determine small company eligibility.
Yes. If the paid-up capital or turnover exceeds the limit in a future financial year, the company will lose its small company status for that year.
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