The Ministry of Corporate Affairs (MCA) has notified the Companies (Specification of Definition Details) Amendment Rules, 2025, introducing a major relaxation in the financial thresholds for classifying a company as a small company. The revised norms are aimed at reducing compliance burden and promoting ease of doing business for India's growing startup and MSME ecosystem.
According to the notification G.S.R. 880(E) issued on December 1, 2025, the amended rules come into effect immediately upon publication in the Official Gazette.
Revised Financial Limits for Small Company Classification
The amendment substitutes clause (t) of Rule 2(1) of the Companies (Specification of Definition Details) Rules, 2014. Under the revised definition:
- Paid-up capital limit for a small company has been increased to Rs 10 crore, and
- Turnover limit has been enhanced to Rs 100 crore.
These thresholds apply for the purposes of sub-clauses (i) and (ii) of clause (85) under Section 2 of the Companies Act, 2013.
This marks a significant upward revision aimed at expanding the scope of companies eligible for simplified regulatory compliance.
Expected Impact
The enhancement of limits is expected to:
- Bring thousands of additional companies under the "small company" category
- Reduce compliance costs for businesses, especially startups and MSMEs
- Encourage entrepreneurship by simplifying statutory obligations such as board meetings, audits, and annual filings
- Align small-company criteria with India's rapidly expanding business landscape
Industry experts view this move as another step in the government's ongoing regulatory reforms under the Companies Act to support ease of doing business and promote formalisation of the economy.
Background
The principal rules were originally notified on March 31, 2014, and last amended in September 2022. The latest amendment continues the government's trend of periodically revising thresholds to reflect economic growth and support smaller entities.
Official copy of the notification has been attached
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