Are we a small company under the 2025 limits, and what do we get?

You run a private company. Your accountant says "you may be a small company now." Your paid-up capital is a few crore. Your turnover is well past the old ₹2 crore line you remember from the Act. You want to know whether the label applies to you, and whether it saves you any work.

The short answer: the limits were raised by a government notification in December 2025. But the label has exclusions, and each relaxation sits in a different section. This article walks through both.

What the law now says

The definition is in section 2(85) of the Companies Act, 2013. A small company is a company, other than a public company, that meets two tests:

• Its paid-up share capital does not exceed fifty lakh rupees, "or such higher amount as may be prescribed which shall not be more than ten crore rupees" (s.2(85)(i), Companies Act 2013).
• Its turnover, as per the profit and loss account for the immediately preceding financial year, does not exceed two crore rupees, "or such higher amount as may be prescribed which shall not be more than one hundred crore rupees" (s.2(85)(ii), Companies Act 2013).

So the Act itself sets the base figures (₹50 lakh and ₹2 crore) and a ceiling (₹10 crore and ₹100 crore). The Government fixes the actual limit by rule, anywhere up to that ceiling.

It has now used the full room. The Ministry of Corporate Affairs issued G.S.R. 880(E) on 1 December 2025. It substituted clause (t) in rule 2(1) of the Companies (Specification of Definition Details) Rules, 2014. The new clause reads: for the purposes of sub-clause (i) and sub-clause (ii) of clause (85) of section 2 of the Act, "paid up capital and turnover of the small company shall not exceed rupees ten crores and rupees one hundred crores respectively" (rule 2(1)(t), Companies (Specification of Definition Details) Rules, 2014, as substituted by G.S.R. 880(E), 1 December 2025).

The amendment rules came into force on the date of their publication in the Official Gazette (rule 1(2), Companies (Specification of Definition Details) Amendment Rules, 2025). The notification is dated 1 December 2025.

In plain words: paid-up capital up to ₹10 crore, and turnover up to ₹100 crore.

The notification's own note says the principal rules were published as G.S.R. 238(E) on 31 March 2014 and were last amended by G.S.R. 700(E) on 15 September 2022. If you are comparing with an older return, check the limits that applied in that year; older material may quote lower figures.

Who is out, whatever the numbers

The definition has a proviso. Nothing in it applies to (s.2(85), proviso, Companies Act 2013):

• (A) a holding company or a subsidiary company;
• (B) a company registered under section 8 (a non-profit company); or
• (C) a company or body corporate governed by any special Act.

Also, the definition starts with "a company, other than a public company". A public company cannot be a small company, however small it is.

This matters more than the figures. A private company with ₹4 crore of paid-up capital and ₹60 crore of turnover looks like a small company. But if it is a subsidiary of another company, or has a subsidiary of its own, it is not one.

Your situation, step by step

Work through these questions in order. Stop at the first "no".

• Are you a private company? If you are a public company, you are out.
• Are you a holding company or a subsidiary? Check your shareholding. If another company controls you, or you control another company, you are out. The Act defines "subsidiary company" in section 2(87); read that definition against your shareholding.
• Are you a section 8 company, or governed by a special Act? If yes, you are out.
• Is your paid-up share capital ₹10 crore or less? Take the figure from the balance sheet. Paid-up capital means the money shareholders have actually paid in.
• Was your turnover ₹100 crore or less? The Act asks for turnover "as per profit and loss account for the immediately preceding financial year" (s.2(85)(ii), Companies Act 2013). So for the year you are filing, look at the previous year's profit and loss account.

A worked example. A private company has no subsidiary and no holding company. Paid-up capital is ₹8 crore. Last year's turnover was ₹60 crore. It passes every step, so on the text of the Act and the 2025 rule it is a small company. The same company with paid-up capital of ₹12 crore fails step 4.

Because the turnover test looks at the previous year, a company can move in and out of the label. Test it afresh each year before you rely on any relaxation.

What a small company gets

The Act gives several relaxations. Each one is in a separate provision, so cite the right one in your working file.

1. No cash flow statement. Section 2(40) lists what a "financial statement" includes, among them a cash flow statement. The proviso says the financial statement, with respect to One Person Company, small company and dormant company, "may not include the cash flow statement" (s.2(40), proviso, Companies Act 2013). The word is "may". It is a relaxation you can use, not a ban.

2. A lighter annual return form. Rule 11(1) of the Companies (Management and Administration) Rules, 2014, as substituted in 2021, says every company files its annual return in Form MGT-7, except One Person Company and Small Company. These file in Form MGT-7A, from the financial year 2020-2021 onwards (rule 11(1), Companies (Management and Administration) Rules, 2014, as substituted by G.S.R. 159(E), 5 March 2021). Section 92 also lets the Government prescribe an abridged annual return form for these companies (second proviso to s.92(1), Companies Act 2013).

3. Who signs the annual return. For most companies the annual return is signed by a director and the company secretary, or by a company secretary in practice where there is no company secretary. For a small company, the return is signed by the company secretary, or where there is no company secretary, by the director of the company (proviso to s.92(1), Companies Act 2013).

4. Fewer board meetings. Section 173(5) says a One Person Company, small company and dormant company are deemed to have complied with section 173 if at least one board meeting has been held in each half of a calendar year, and the gap between the two meetings is not less than ninety days (s.173(5), Companies Act 2013). That is two meetings a year, spaced out.

5. An abridged Board's report. Section 134(3A) lets the Government prescribe an abridged Board's report for One Person Company or small company (s.134(3A), Companies Act 2013). Check whether and in what form it has been prescribed before you rely on it.

6. Relief from the audit reporting order. The Companies (Auditor's Report) Order, 2020 applies to every company except a list of exclusions. One of them is a One Person Company and a small company as defined in section 2(85) (paragraph 1(2)(iv), Companies (Auditor's Report) Order, 2020). In practice, the auditor's report need not carry the detailed CARO statements.

The deadline clock

The label is not a one-time registration. It is a test you apply each year. The one dated fact is the notification itself.

• The definition took effect for the higher limits from 1 December 2025, the date of publication (rule 1(2), Amendment Rules, 2025).
• The turnover test uses the immediately preceding financial year (s.2(85)(ii), Companies Act 2013). The capital test uses your paid-up share capital as the Act and rule describe it; the text does not name a separate date, so take it from the balance sheet you are filing with.
• For the annual return, the form changes with your status. Decide the status before you open the portal, because MGT-7A and MGT-7 are different forms (rule 11(1), Companies (Management and Administration) Rules, 2014).

The notification gives no separate transition date for a year that closed near 1 December 2025. Ask your CA which year the relaxations apply to.

Filing: what changes on the portal

For the annual return, a company that qualifies uses Form MGT-7A instead of Form MGT-7 (rule 11(1), Companies (Management and Administration) Rules, 2014). For the financial statements, you may leave out the cash flow statement (s.2(40), proviso, Companies Act 2013). Leaving it out is allowed, not required.

For board meetings, record the dates. Two meetings in different halves of the calendar year, at least ninety days apart, satisfy section 173 for a small company (s.173(5), Companies Act 2013). Keep the minutes.

What not to do

• Do not rely on the label without the exclusions. A subsidiary or holding company is not a small company, whatever its size (s.2(85), proviso, Companies Act 2013).
• Do not test only capital. Both capital and turnover must be within the limits.
• Do not use last year's status without re-testing. Turnover is read for the preceding financial year, so the answer can change.
• Do not skip board meetings entirely. The relief is two meetings with a ninety-day gap, not none (s.173(5), Companies Act 2013).

What to do now

• Next step: Check, in this order, that you are a private company, not a holding or subsidiary company, not a section 8 company and not under a special Act (s.2(85), proviso, Companies Act 2013). Then compare paid-up capital with ₹10 crore and the previous year's turnover with ₹100 crore (rule 2(1)(t), Companies (Specification of Definition Details) Rules, 2014, as substituted by G.S.R. 880(E)).
• Deadline: The limits apply from 1 December 2025 (rule 1(2), Amendment Rules, 2025). Test your status each financial year before you choose the annual return form. For the due date of the return itself, check the current date on the MCA portal before you file.
• Consequence: If you file as a small company when you are not one, you use the wrong form and the wrong signatory under rule 11(1) of the Management and Administration Rules and section 92(1). Penalties for defaults in filing are set by the Act; check the current amount on the MCA portal before you file.

Have a CA review your facts before you act or file.

Frequently asked questions

Is a private limited company with ₹9 crore paid-up capital and ₹80 crore turnover a small company?
On the figures, yes. Both are within ₹10 crore and ₹100 crore (rule 2(1)(t), Companies (Specification of Definition Details) Rules, 2014, as substituted by G.S.R. 880(E)). It must also not be a holding or subsidiary company, a section 8 company, or governed by a special Act (s.2(85), proviso, Companies Act 2013).

Can a public company be a small company?
No. The definition covers "a company, other than a public company" (s.2(85), Companies Act 2013).

Is a start-up or a company with only one shareholder automatically a small company?
No. A One Person Company is separately defined as a company with only one person as a member (s.2(62), Companies Act 2013). The small company label is decided by the tests in section 2(85). Some relaxations, such as the Form MGT-7A and the cash flow proviso, name both.

Do I have to use the relaxations?
For the cash flow statement, the Act says the financial statement "may not" include it (s.2(40), proviso, Companies Act 2013). For the annual return, the rule names MGT-7A for small companies (rule 11(1), Companies (Management and Administration) Rules, 2014). Use the form that matches your status.

Where do I confirm the current limits?
The Official Gazette notification G.S.R. 880(E) of 1 December 2025 is the source. Check the MCA portal for any later amendment before you file.

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See Also

• Cost records and cost audit under section 148: the second audit companies overlook
• Board's Report Under Section 134: Contents, Signing and Penalty
• Section 8 Company Annual Compliance: AGM, Filings and Licence Conditions