On 1 December 2025 the Ministry of Corporate Affairs notified the Companies (Specification of Definition Details) Amendment Rules 2025 [L3-C1], revising the small-company threshold under Section 2(85) of the Companies Act 2013.
What the threshold is now
A company qualifies as a small company if it is not a public company AND:
- Paid-up share capital does not exceed ₹10 crore
- Turnover as per profit and loss account for the immediately preceding financial year does not exceed ₹100 crore
Both conditions must be met. A company crossing either threshold is not a small company. The earlier limits were ₹4 crore paid-up and ₹40 crore turnover; the new limits are 2.5 times higher on both axes.
Excluded from small-company status regardless of size
- Public companies
- Holding companies of other companies
- Subsidiaries of other companies
- Section 8 companies
- Companies governed by any special Act
What small-company status actually gets you
The following reductions in compliance burden apply:
- Annual return in MGT-7A instead of MGT-7 under Rule 11 of MA Rules 2014. Simpler form, fewer schedules. MGT-8 certification by a Practising Company Secretary is not required for MGT-7A filers.
- Cash-flow statement is not part of financial statements under Rule 3 of Companies (Accounts) Rules 2014. Reduces preparation effort for finance and audit teams.
- Fewer board meetings under the second proviso to Section 173(5). A small company may hold at least one board meeting in each half of the calendar year, with a gap of not less than 90 days between the two meetings. Compare to the standard four-per-year rule with the 120-day gap requirement.
- No auditor rotation under Rule 5 of Audit Rules. Small companies are outside the auditor-rotation net; the same auditor firm can continue year after year without the 5+5 or 10+10 cycle.
- Sec 92 annual return signing can be by a director alone; no requirement for the CS signature.
- Reduced penalties under Section 446B (specifically for small companies and OPCs): if a fine or penalty is imposed, the maximum shall not exceed one-half of the amount otherwise leviable. A material relief when things go wrong.
Practitioner audit
The moment the amendment was notified (1 December 2025), every private company client should have been re-classified. If the audit tells you that a client is now a small company but you are still filing MGT-7, you are doing extra work for no reason and the client is paying for compliance it does not need. Conversely, if the client crossed either threshold in the last financial year, its next annual filing must move to MGT-7 and its Board must plan four board meetings a year.
How to run the classification
- Pull the audited financials for the immediately preceding financial year.
- Check paid-up share capital (bearer of the ₹10 crore ceiling).
- Check turnover per profit and loss account (bearer of the ₹100 crore ceiling).
- Confirm no exclusion applies (not public, not holding of another company, not subsidiary of another company, not Section 8, not governed by a special Act).
- Document the classification in the internal compliance register with a review date at the start of the next financial year.
Verification note
The 1 December 2025 amendment is the current position as of 10 August 2026. Any further revision to the small-company threshold must be checked against MCA Notifications before advising a client. This is on the manual verification checklist.