India’s definition of a small company changed on 1 December 2025. Under the revised prescribed limits, paid-up share capital must not exceed ₹10 crore and turnover must not exceed ₹100 crore. The company must also meet the applicable legal conditions and must not fall within the categories excluded by Section 2(85) of the Companies Act, 2013.
The change was introduced through the Companies (Specification of Definition Details) Amendment Rules, 2025. The Ministry of Corporate Affairs said the revised limits were intended to bring more companies within the small-company framework and reduce compliance burdens for eligible businesses.
| Measure | Revised prescribed limit |
|---|---|
| Paid-up share capital | ₹10 crore |
| Turnover | ₹100 crore |
Both conditions must be met. A company with paid-up capital below ₹10 crore but turnover above ₹100 crore should not assume it qualifies. The same applies to a company with turnover below ₹100 crore but paid-up capital above ₹10 crore.
Section 2(85) excludes holding companies, subsidiary companies, companies registered under Section 8, and companies or bodies corporate governed by a special Act. Public companies are also outside the definition.
This means that financial figures alone cannot confirm eligibility. A company’s ownership structure and legal status must also be reviewed.
No. The Companies Act definition and the MSME classification have different legal purposes and criteria. A company should not use its Udyam certificate as the only evidence that it qualifies as a small company under company law.
Review the company’s paid-up capital, relevant turnover figures, legal type and ownership structure. Then check the applicable financial year and current MCA instructions before selecting MGT-7 or MGT-7A.
Key takeaway: The revised limits broaden the potential eligibility pool, but they do not make every private limited company a small company.
Indian companies must complete their annual compliance requirements even when business activity is limited or the company has not generated revenue. However, the type of annual return a company files can depend on its legal classification. A significant change took effect on 1 December 2025: the Ministry of Corporate Affairs …
