Small Company Threshold Doubling Under Corporate Laws Bill 2026: Will Your Pvt Ltd Qualify?

A proposed amendment in the Corporate Laws (Amendment) Bill, 2026 suggests doubling the statutory ceiling for a “small company” from ₹10 crore paid-up share capital and ₹100 crore turnover to ₹20 crore and ₹200 crore, respectively. However, that would not automatically qualify every Pvt Ltd with lower paid-up capital or turnover as a small company, because the operative limits will be defined by MCA rules under the higher ceiling. This blog covers what the Bill proposes, what applies today, and what you should do now.

Want to know where your company stands today? See our guide to the annual compliance of a private limited company.

What Is a Small Company Under the Companies Act?

“Small company” is a concept defined under Section 2(85) of the Companies Act, 2013. It is applicable only to a private company that fulfils certain paid-up capital and turnover criteria and is not covered by an exclusion. Both tests must be met. Paid-up share capital is measured as at the last balance sheet date, and turnover is taken from the profit and loss account of the immediately preceding financial year.

Such companies are entitled to relaxed compliance, such as filing a less detailed annual return form, holding fewer board meetings and not preparing a cash flow statement.

Some of the exclusions are as follows:

• Public companies
• Holding and subsidiary companies
• Section 8 companies
• Companies or bodies corporate governed by any special Act

What the Corporate Laws Bill 2026 Proposes

The Corporate Laws (Amendment) Bill, 2026 was introduced in the Lok Sabha on 23 March 2026 and referred to a Joint Parliamentary Committee. The Committee presented its report on 3 August 2026, backing the Bill with changes. As of 2 November 2026, the PRS tracker shows no passage, so the Bill is not yet law. The final text may differ from the version introduced.

In the case of small companies, the Bill proposes to raise the statutory cap in Section 2(85):

Parameter	Current Statutory Ceiling	Proposed Statutory Ceiling
Paid-up share capital	₹10 crore	₹20 crore
Turnover	₹100 crore	₹200 crore

This doubles the maximum limit that Parliament allows MCA to fix under this section. It should be understood that this is the maximum limit and not the actual eligibility limit on the date the Bill is enacted.

Want to know whether your Pvt Ltd will qualify under the proposed rules? Get an eligibility check from Kanakkupillai through our annual compliance service.

Current Small Company Thresholds in India

Under the present MCA rules, a company is a small company if:

• Its paid-up share capital is not more than ₹10 crore; and
• Its turnover for the previous year, as per the profit and loss account, does not exceed ₹100 crore.

The government raised the thresholds from ₹4 crore and ₹40 crore to ₹10 crore and ₹100 crore with effect from 1 December 2025 (G.S.R. 880(E)). The ₹4 crore and ₹40 crore limits had applied since September 2022.

Period	Paid-up Capital	Turnover
September 2022 to November 2025	Up to ₹4 crore	Up to ₹40 crore
From 1 December 2025 (current)	Up to ₹10 crore	Up to ₹100 crore
Proposed ceiling under the Bill	Up to ₹20 crore (if prescribed)	Up to ₹200 crore (if prescribed)

The December 2025 notification used up all the room the Act allows, because the existing ceiling was ₹10 crore and ₹100 crore. So MCA cannot go higher unless Parliament raises the ceiling, which is what the Bill proposes. Thus, the Bill provides room for future increases through rules. It does not change today’s effective thresholds.

Point to Remember: “And” vs “Or”

In the present system, a company needs to satisfy the limit prescribed for both paid-up capital and turnover. The new Bill increases the maximum limit that could be prescribed for both parameters. Only paid-up share capital counts, not authorised capital. Securities premium is also generally not part of paid-up share capital, which matters for startups that raise money at a premium.

Will Your Private Limited Qualify After the Bill?

Your Private Limited will be able to qualify as a small company if and only if:

• It is a private limited company and not a public company.
• It is neither a holding company nor a subsidiary company.
• It is not a Section 8 company.
• It is not a company governed by a special Act.
• Its paid-up share capital falls within the limits prescribed by MCA.
• Its turnover during the immediately preceding year falls within the limits prescribed by MCA.

Practical Examples

Company Profile	Likely Position After Final Rules
Pvt Ltd with ₹8 crore paid-up capital and ₹90 crore turnover	Qualifies under the current ₹10 crore and ₹100 crore limits.
Pvt Ltd with ₹15 crore paid-up capital and ₹150 crore turnover	May qualify only if MCA prescribes limits above the current levels, up to the proposed ₹20 crore and ₹200 crore ceiling.
Pvt Ltd with ₹18 crore capital but ₹250 crore turnover	Will not qualify even at the full proposed ceiling, since turnover exceeds ₹200 crore.
Subsidiary of a listed company with ₹5 crore capital and ₹30 crore turnover	Does not qualify, because holding and subsidiary companies are excluded.
Pvt Ltd with ₹6 crore paid-up capital and ₹70 crore turnover	Qualifies today, though it would not have qualified before December 2025.

Companies That Cannot Qualify as Small Companies

Even if a company fulfils the financial tests, the firms below cannot be considered small companies:

• Public limited companies, since the criteria are applicable only to private companies.
• Holding companies and subsidiary companies, irrespective of their size.
• Section 8 companies, such as not-for-profit companies.
• Companies incorporated under any other special Act, such as statutory companies in certain sectors.

This is one of the most neglected points on many online pages. Founders think that low capital and turnover alone make the company eligible, but the statute adds these restrictions.

Compliance Benefits of Small-Company Status

Small-company status can lessen the compliance burden for eligible private companies. Some of the common advantages include:

• No cash flow statement: it is not required as part of the financial statements.
• Fewer board meetings: two board meetings a year, one in each half of the calendar year with a gap of at least 90 days, instead of the regular four.
• Simple annual return: Form MGT-7A with fewer disclosures, and no practising company secretary certification. See MGT-7A for small companies and OPCs.
• Lighter auditor reporting: the CARO 2020 report does not apply to a small company, and some other auditor reporting requirements are relaxed.
• Lower penalties: under Section 446B, penalties for a small company are limited to half of the specified amount, subject to a maximum of ₹2 lakh for the company and ₹1 lakh for each officer in default.
• No mandatory dematerialisation: small companies are exempt from the rule that requires private companies to hold shares in demat form.
• No audit rotation: the audit rotation rule does not apply to small companies.

Such benefits can be particularly helpful for bootstrapped startups, family-owned businesses, and SMEs that wish to conserve their cash and managerial effort.

What Small-Company Status Does Not Give You

• An audit exemption: every company, including a small company, must still appoint an auditor and get its accounts audited. The Bill proposes an exemption for prescribed classes of companies, and the Joint Committee would limit it to private companies, but this is not law yet.
• A CSR exemption: CSR applies only above net worth, turnover or profit thresholds. It does not depend on small-company status, though a company that qualifies as small will rarely meet them.
• Relief from AGMs, registers, GST or income tax filings.

Reduce avoidable ROC compliance work. Let Kanakkupillai review your company’s eligibility and build a small-company compliance calendar. See our guides on AOC-4 and MGT-7 and annual compliance costs for a private limited company.

Small Company vs MSME vs Startup

Point	Small Company	MSME	Startup
Governing law	Companies Act, 2013	MSMED Act, 2006	DPIIT recognition and Companies Act provisions
Test	Paid-up capital and turnover, with exclusions	Investment and turnover	Age, turnover and innovation
Benefit	Compliance relief under company law	Credit, procurement and payment protection	Tax, funding and compliance benefits
Registration	No separate registration, self-assessed	Udyam registration	DPIIT recognition

A company can be both a small company and an MSME, but the two tests are different. See Udyam registration and Startup India registration.

What the Bill Does Not Change

The Bill does not automatically qualify every private company whose capital or turnover does not exceed ₹20 crore and ₹200 crore as a small company. The exact operational thresholds would continue to be notified through rules.

The exclusions relating to public companies, holding companies, subsidiary companies, Section 8 companies, and special Act companies continue to remain untouched.

Moreover, being a small company does not relieve the company of all its corporate liabilities. Such companies must keep the statutory registers, file annual returns and financial statements, convene the required meetings, and more. The Bill also proposes other changes to company law, such as a higher CSR profit threshold, virtual meetings and fast-track mergers. See our guide to the latest amendments to the LLP Act for related changes.

Impact on Indian Startups and SMEs

More scope for expansion

If MCA finally prescribes a higher ceiling, entities with paid-up capital between ₹10 crore and ₹20 crore, or revenue between ₹100 crore and ₹200 crore, will be able to benefit as small companies for a longer duration. That might help save compliance cost at an important stage of business growth.

More favourable for capital-intensive businesses

Many enterprises, such as manufacturing, logistics, healthcare, deep-tech and D2C products, need considerable paid-up capital or reach higher revenues before profits. A higher ceiling helps these enterprises scale up without immediately moving into a compliance-heavy category.

Nothing much for group structures

A startup with a parent and subsidiary structure does not get any relief just because each entity is privately held. Holding and subsidiary companies remain excluded.

Small Company Status for Companies in Chennai and Tamil Nadu

Tamil Nadu has many private companies close to these limits, especially in manufacturing, textiles and engineering clusters in Chennai, Coimbatore and Tiruppur. These businesses often carry higher paid-up capital or turnover, which is the kind of company the proposal is aimed at. A company registered in Chennai files its AOC-4 and MGT-7 or MGT-7A with ROC Chennai, and the filings are online. See our pages on annual compliance filing for a Pvt Ltd company in Chennai and in Tamil Nadu, or our private limited company registration in Chennai service.

• Check your latest balance sheet and profit and loss account against the current ₹10 crore and ₹100 crore limits before choosing between MGT-7 and MGT-7A.
• Many Tamil Nadu family companies are close to the limit, so a family or investor capital infusion can change the position.
• Family companies with holding and subsidiary structures should review whether the structure is needed. See private limited company for a family business for more on structuring.

How to Prepare Before the Law Changes

1. Monitor Paid-Up Capital

Do not increase your paid-up capital without cause. Only paid-up share capital counts, not authorised capital. If your Pvt Ltd is close to the existing ₹10 crore limit, evaluate whether an increase is really required for your operations and financing. See change in share capital.

2. Pay Attention to Turnover

Turnover is calculated on the basis of the profit and loss account for the immediately preceding financial year. A company that exceeds the notified turnover limit may lose its small company status for the following year.

3. Analyse Group Structure

If your Pvt Ltd is a subsidiary, examine the need for that group structure. Restructuring the relationship between a holding company and its subsidiary is a crucial decision.

4. Keep ROC Filings Up to Date

Keep your financial statements, share capital records, minutes of meetings and other annual filings up to date. It will help prove your eligibility and make a switch easier if the limits change.

5. Obtain Professional Advice Before Raising Funds

Sometimes investors ask for certain capital structures, ESOP pools and subsidiaries for their benefit. Balance the benefits of small-company status with your funding, governance and other requirements.

Planning a funding round or capital increase? Speak to Kanakkupillai before altering your share capital or corporate structure, and see our guides on share transfer and event-based compliances.

How Kanakkupillai Can Help?

Kanakkupillai is a Chennai-headquartered legal and compliance services company with 19+ years of experience and 1 lakh+ customers served. We can help in these areas.

Eligibility of a Pvt Ltd as a Small Company

• Evaluate your Pvt Ltd against the current thresholds of capital and turnover.
• Check the exclusions: holding company, subsidiary, Section 8 and special Act companies.
• Review the financials and ROC filings of the past few years.
• Determine the exact compliance benefits available to you.
• Monitor the amendments proposed in the Corporate Laws Bill 2026.

Capital Structure of the Company

• Guide you through the implications of increasing your paid-up capital.
• Guide you on founder, investor and ESOP capital changes.
• Check whether a capital increase will affect the small company status.
• Help with share allotments and ROC filings.
• Coordinate valuation and capitalisation needs.

ROC Compliance Management

• Maintain a company-specific ROC compliance calendar.
• Support annual return and financial statement filing.
• Support board meeting documentation and minutes.
• Support statutory registers and record maintenance.
• Track filing dates to avoid late fees.

Financial Statement Support

• Coordinate preparation of financial statements and schedules.
• Coordinate the cash flow statement requirement depending on eligibility.
• Ensure that turnover is accounted for correctly in the profit and loss account.
• Support auditors and reporting requirements.
• Maintain audit-ready documentation.

Advice for Corporate Restructuring

• Evaluate the compliance implications of forming subsidiaries or holding companies.
• Advise on group structuring for operational, IP and investment purposes.
• Support company conversion and restructuring documentation.
• Evaluate whether there is a commercial justification for a group structure.
• Coordinate with legal, tax and ROC.

Continuous Regulatory Monitoring

• Monitor the passage of the Corporate Laws (Amendment) Bill, 2026.
• Keep an eye on MCA notifications on the prescribed thresholds.
• Inform you when the operative thresholds change.
• Conduct reviews every financial year-end.
• Inform you in advance if a capital or turnover increase makes you ineligible.

Stay ahead of the 2026 corporate-law changes. Talk to Kanakkupillai’s experts through our private limited company compliance page.

Conclusion

The Corporate Laws (Amendment) Bill, 2026 is an important Bill for India’s small businesses and startups, as it provides room for higher small-company thresholds. But founders need to keep in mind that they will not become eligible right away, because the Bill increases the maximum permitted thresholds, whereas the MCA will provide the actual thresholds. For most Pvt Ltd companies, the actionable step right now is to monitor paid-up capital and turnover, analyse group structure, and stay ROC compliant.

FAQs on the Small Company Threshold

1. Has the small-company threshold already doubled?

No. The Corporate Laws (Amendment) Bill, 2026 proposes to double the statutory ceiling from ₹10 crore to ₹20 crore for paid-up capital and from ₹100 crore to ₹200 crore for turnover. The actual operative limits will be prescribed separately through rules.

2. What is the current small-company limit?

Under the current MCA-prescribed thresholds, a private company qualifies if paid-up capital does not exceed ₹10 crore and turnover does not exceed ₹100 crore. These limits have applied since 1 December 2025.

3. Will a Pvt Ltd with ₹15 crore capital automatically become a small company?

Not automatically. It may qualify only if MCA prescribes an operative paid-up capital limit above ₹15 crore, up to the proposed ₹20 crore statutory ceiling, and the company also meets the turnover and exclusion tests.

4. Does the Bill apply to public companies?

No. A small company must be a company other than a public company. Public companies cannot qualify as small companies.

5. Can a subsidiary qualify as a small company?

No. Holding companies and subsidiary companies are expressly excluded from the small-company definition, irrespective of their capital or turnover.

6. What are the main benefits of small-company status?

Benefits can include no cash flow statement, only two board meetings a year, the simplified MGT-7A annual return, lighter auditor reporting, lower penalties and no mandatory dematerialisation, subject to applicable law.

7. Does turnover include GST?

For the Companies Act definition, turnover is determined from the profit and loss account for the immediately preceding financial year. Under the usual accounting treatment, GST collected is not part of revenue, so turnover is generally shown net of GST. Confirm the exact computation with your auditor.

8. When will the new thresholds take effect?

The Bill was introduced on 23 March 2026 and referred to a Joint Committee, which presented its report on 3 August 2026. It must complete the legislative process, and MCA must notify the operative thresholds through rules, before companies can rely on any higher limit.

9. Does authorised capital count for small company status?

No. Only paid-up share capital counts, as at the last balance sheet date.

10. Does a small company need a statutory audit?

Yes. Small-company status does not exempt a company from appointing an auditor. The Bill proposes an exemption for prescribed classes, but it is not law.

11. Which annual return does a small company file?

Form MGT-7A, together with Form AOC-4 for the financial statements. Other private companies file Form MGT-7.

12. Is a small company the same as an MSME?

No. They are tested under different laws. A small company is defined in the Companies Act, 2013, and an MSME is defined in the MSMED Act, 2006, with separate investment and turnover tests.

Official Sources

• Ministry of Corporate Affairs (MCA)
• PRS India: The Corporate Laws (Amendment) Bill, 2026