small company
Introduction
The concept of a Small Company was introduced under the Companies Act, 2013 to reduce compliance burden on smaller businesses.
Over time, the Government has gradually increased the limits of Paid-up Capital and Turnover through various MCA notifications, expanding the scope of this definition.
⚖️ Legal Provision – Section 2(85)
As per Section 2(85):
- Paid-up Share Capital ≤ ₹50 lakh (or higher prescribed limit)
- Turnover ≤ ₹2 crore (or higher prescribed limit)
👉 Maximum permissible limit (as per Act):
- Capital: ₹10 crore
- Turnover: ₹100 crore
🏁 Stage 1: Original Position (2013)
At the time of implementation of Companies Act, 2013:
- Paid-up Capital: ₹50 lakh
- Turnover: ₹2 crore
📌 This was the base definition, applicable from beginning.
🔄 Stage 2: First Revision – 2021
📢 Notification: G.S.R. 92(E) dated 01.02.2021
👉 Amendment in Companies (Specification of Definitions Details) Rules, 2014
✅ New Limits:
- Paid-up Capital: ₹2 crore
- Turnover: ₹20 crore
📌 As clearly mentioned in notification:
“paid up capital and turnover… shall not exceed ₹2 crore and ₹20 crore respectively”
📅 Effective from: 01 April 2021
🚀 Stage 3: Second Revision – 2022
📢 Notification: G.S.R. 700(E) dated 15.09.2022
✅ Revised Limits:
- Paid-up Capital: ₹4 crore
- Turnover: ₹40 crore
📌 Notification clearly substituted limits to:
“₹4 crore and ₹40 crore respectively”
📅 Effective: From date of publication
🔥 Stage 4: Latest Revision – 2025
📢 Notification: G.S.R. 880(E) dated 01.12.2025
✅ Latest Limits:
- Paid-up Capital: ₹10 crore
- Turnover: ₹100 crore
📌 As per notification:
“shall not exceed ₹10 crore and ₹100 crore respectively”
📅 Effective: From date of publication
📊 Complete Evolution Summary
| Year | Paid-up Capital | Turnover | Notification |
|---|---|---|---|
| 2013 | ₹50 lakh | ₹2 crore | Companies Act |
| 2021 | ₹2 crore | ₹20 crore | GSR 92(E) |
| 2022 | ₹4 crore | ₹40 crore | GSR 700(E) |
| 2025 | ₹10 crore | ₹100 crore | GSR 880(E) |
❗ Important Conditions (Always Same)
Small Company definition apply nahi hogi agar company:
- Public Company hai
- Holding/Subsidiary hai
- Section 8 Company hai
- Special Act governed entity hai
🧠 Conclusion
Small Company definition ka evolution clearly show karta hai:
➡ ₹50 lakh → ₹10 crore
➡ ₹2 crore → ₹100 crore
Government ka clear intention hai:
✔ Compliance reduce karna
✔ MSME & startups ko support karna
✔ Ease of doing business improve karna
❓ Frequently Asked Questions (FAQ) – Small Company (Companies Act, 2013)
❓ What is a Small Company under Companies Act, 2013?
A Small Company is defined under Section 2(85) of the Companies Act, 2013 as a company (other than a public company) whose:
- Paid-up Share Capital does not exceed prescribed limit
- Turnover does not exceed prescribed limit
👉 Current limits (2025):
- Capital: ₹10 crore
- Turnover: ₹100 crore
❓ What is the latest limit of Small Company in India?
As per latest MCA notification (2025):
- Paid-up Capital: ₹10 crore
- Turnover: ₹100 crore
👉 These are the maximum limits allowed under law.
❓ What were the limits of Small Company earlier?
The limits have increased over time:
- 2013 → ₹50 lakh / ₹2 crore
- 2021 → ₹2 crore / ₹20 crore
- 2022 → ₹4 crore / ₹40 crore
- 2025 → ₹10 crore / ₹100 crore
❓ Which companies cannot be treated as Small Company?
Following companies are excluded:
- Public Company
- Holding Company
- Subsidiary Company
- Section 8 Company
- Company governed by special Act
❓ From when are new limits of Small Company applicable?
👉 The new limits become applicable from the date of notification in Official Gazette, unless otherwise specified.
Example:
- 2021 limits → 1 April 2021
- 2022 & 2025 → From date of publication
❓ Can a company become Small Company later?
👉 Yes, if it satisfies:
- Capital limit
- Turnover limit
📌 Status is checked every financial year
❓ Is Small Company definition given in Act or Rules?
👉 Basic definition is given in Companies Act, 2013 (Section 2(85))
👉 Actual limits are prescribed through Rules & Notifications
📌 Always refer latest MCA notification for correct limits.
❓ What is turnover considered for Small Company?
👉 Turnover is taken from:
Profit & Loss Account of immediately preceding financial year
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