MCA revises definition of “Small Cos”; raises threshold for paid up capital from Rs. 50 lakhs to Rs. 2 cr.

  • Corporate law
  • notification
  • financeseva

The Ministry of Corporate Affairs (MCA) has informed the Companies (Specification of Definitions Details) Amendment Rules, 2021, where the threshold limit for small businesses has been increased.  

The amendment shall be effective from Apr 01, 2021. As per the proposed amendment, the companies having paid up capital upto Rs 2 crores or having turnover upto Rs. 20 crores should be small businesses. 

Earlier the paid-up capital limit was Rs. 50 lakhs and turnover limit was Rs. 2 crores. With the advent of this notice, more than l0 lakhs companies would enjoy the advantages of being small businesses.  

As a result, the compliance burden will be substantially reduced under the Companies Act, 2013 for such firms that were previously left out of the ambit of small businesses.