{“@context”:”https://schema.org”,”@type”:”BlogPosting”,”headline”:”Small Company Definition India: Section 2(85) Criteria, Thresholds and Compliance Benefits”,”description”:”What qualifies as a small company under Section 2(85) of the Companies Act 2013 — paid-up capital and turnover thresholds as revised, compliance relaxations for small companies including auditor rotation exemption, reduced board report requirements, and annual filing benefits.”,”author”:{“@type”:”Person”,”name”:”Tradeviser Editorial”},”publisher”:{“@type”:”Organization”,”name”:”Tradeviser”},”datePublished”:”2026-09-27″,”inLanguage”:”en-IN”,”mainEntityOfPage”:{“@type”:”WebPage”,”@id”:”https://tradeviser.com/small-company-definition-india/”}}

{“@context”:”https://schema.org”,”@type”:”FAQPage”,”mainEntity”:[{“@type”:”Question”,”name”:”What is the definition of a small company under the Companies Act 2013?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:”Section 2(85) of the Companies Act 2013 defines a small company as a company (other than a public company) that satisfies BOTH conditions: (1) paid-up share capital does not exceed ₹4 crore, AND (2) turnover as per the last profit and loss account does not exceed ₹40 crore. Both conditions must be satisfied simultaneously. If either threshold is breached, the company loses small company status.”}},{“@type”:”Question”,”name”:”Who cannot be classified as a small company?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:”The following categories of companies are expressly excluded from the definition of small company under Section 2(85) even if they satisfy the paid-up capital and turnover thresholds: (a) Public Limited Companies; (b) Holding companies; (c) Subsidiary companies; (d) Companies registered under Section 8 (non-profit companies); and (e) Companies or bodies corporate governed by any special Act of Parliament or a State Legislature.”}},{“@type”:”Question”,”name”:”What compliance relaxations do small companies get?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:”Small companies under the Companies Act 2013 enjoy several compliance relaxations: (1) No mandatory rotation of auditors (exempt from Section 139(2) auditor rotation); (2) Board report can be an abridged version under Rule 8A of the Companies (Accounts) Rules 2014; (3) No requirement to include cash flow statement in financial statements; (4) Reduced annual return filing fees; (5) Signatories for annual return (MGT-7A): a small company can file through a director (rather than requiring a CS signature); and (6) Self-certification on annual return is allowed.”}},{“@type”:”Question”,”name”:”Do small companies need to comply with CSR requirements?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:”Section 135 CSR requirements apply to companies with net worth ≥ ₹500 crore, OR turnover ≥ ₹1,000 crore, OR net profit ≥ ₹5 crore in the immediately preceding financial year. Since small companies have a turnover ceiling of ₹40 crore, they fall well below the CSR turnover threshold — so small companies are generally exempt from mandatory CSR spending.”}},{“@type”:”Question”,”name”:”What are the current small company thresholds after the 2022 amendment?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:”The Companies (Amendment) Act 2020 (effective from 1 April 2021) raised the small company thresholds from ₹50 lakh paid-up capital and ₹2 crore turnover to ₹2 crore paid-up capital and ₹20 crore turnover. A subsequent amendment (Companies Amendment Rules 2022) further raised the thresholds to ₹4 crore paid-up capital and ₹40 crore turnover — the current applicable limits.”}}}]}

{“@context”:”https://schema.org”,”@type”:”HowTo”,”name”:”How to Determine if Your Company Qualifies as a Small Company”,”step”:[{“@type”:”HowToStep”,”position”:1,”name”:”Check paid-up share capital”,”text”:”The company’s paid-up share capital must not exceed ₹4 crore. Refer to the paid-up capital figure in the latest balance sheet.”},{“@type”:”HowToStep”,”position”:2,”name”:”Check turnover”,”text”:”Turnover as per the last profit and loss account (most recent audited financial year) must not exceed ₹40 crore. Both conditions must be met simultaneously.”},{“@type”:”HowToStep”,”position”:3,”name”:”Confirm entity type is not excluded”,”text”:”Confirm that the company is not a Public Limited Company, a Holding Company, a Subsidiary Company, a Section 8 Company, or a company governed by special legislation. All these are excluded regardless of thresholds.”},{“@type”:”HowToStep”,”position”:4,”name”:”Record small company status in annual return”,”text”:”If both thresholds are satisfied and the company is not excluded, it qualifies as a small company for that financial year. This status is recorded in Form MGT-7A (the simplified annual return for small companies) filed with the ROC.”},{“@type”:”HowToStep”,”position”:5,”name”:”Apply relevant compliance relaxations”,”text”:”Once confirmed as a small company, apply the applicable relaxations — no auditor rotation, abridged board report, no mandatory cash flow statement, and simplified MGT-7A filing.”}]}

CA Madhusmita Padal

CA Madhusmita Padal is a Practicing Chartered Accountant with firms based in Odisha and Chennai. She specializes in taxation, company law, and auditing. She is passionate about simplifying complex concepts and making knowledge accessible to all.