MCA raises small company limits: Capital to Rs 10 cr, turnover to Rs 100 cr for easier compliance

The Ministry of Corporate Affairs (MCA) has implemented significant amendments to the Companies (Identification Particulars Specification) Rules 2014, under the Companies (Identification Particulars Specification) Amendment Rules 2025. These new provisions, issued through notification GSR 880(E) on 1 December 2025, immediately review the financial thresholds for companies seeking classification as a small company. Industry observers point to this measure as a strategic move to support India’s business landscape, particularly benefiting the startup and SME sectors by reducing their regulatory obligations and associated costs.

Under the revised rules, the paid-up capital ceiling for small businesses has been raised from earlier levels to Rs 10 lakh crore, while the turnover threshold has been increased to Rs 100 lakh crore. These updated standards now apply in accordance with sub-clauses (1) and (2) of clause (85) under Section 2 of the Companies Act 2013. The move is expected to expand eligibility for small company status, providing a simplified regulatory environment for a greater number of companies.

The notification expressly states that the revised definition replaces Clause

According to experts, these higher thresholds are designed to “bring thousands more companies into the ‘small business’ category.” This expansion is expected to ease regulatory pressure on companies navigating legal obligations, including board meetings, annual filings and audit requirements.

The changes are aimed directly at reducing the compliance burden on eligible businesses, especially startups and small and medium-sized businesses, which often cite legal complexity as a barrier to growth. The government believes that these reforms are in line with its broader agenda to enhance the ease of doing business and encourage entrepreneurship across the country.

The Companies (Identification Details Specification) Rules were originally notified in March 2014 and were most recently amended in September 2022 prior to this update. The latest amendment continues the government’s approach of adjusting regulatory boundaries in response to the evolving needs of India’s corporate sector.