Companies With Turnover Up to ₹100 Crore Now Classified as Small Companies

The Government of India has introduced a major regulatory reform aimed at supporting startups, scale-ups, and medium-sized businesses. Under the revised norms, companies with an annual turnover of up to ₹100 crore will now be classified as “small companies”, a sharp increase from the earlier ₹40 crore threshold.

Additionally, the paid-up capital limit has been raised to ₹10 crore, expanding the number of companies eligible for simplified compliance and regulatory relief.

The move is designed to reduce compliance burden, lower operating costs, and enable smoother scaling for growing businesses.

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A Strong Push for Ease of Doing Business

This revised definition marks an important step toward improving ease of doing business in India.

Under the earlier framework, companies crossing the ₹40 crore turnover mark were quickly subjected to compliance norms designed for much larger enterprises. This often resulted in:

• Higher legal and audit costs
• More complex reporting requirements
• Increased dependency on professional services

By raising the threshold to ₹100 crore, the government allows growing companies to scale revenues without an immediate regulatory shock—a critical relief for fast-growing startups, technology firms, and manufacturing businesses.

The reform enables founders and leadership teams to focus on innovation, market expansion, and hiring, rather than paperwork and procedural overhead.

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What Compliance Relief Do Small Companies Get?

Companies that qualify as small companies under the new rules will continue to enjoy several regulatory relaxations, including:

• Simplified financial reporting
• Exemption from preparing cash flow statements
• Lower penalties for procedural or minor compliance lapses
• Reduced filing fees
• Simpler board report formats
• Faster and simpler approval processes for mergers and amalgamations

While small companies must still hold at least one board meeting every six months, the overall compliance framework remains significantly lighter than that applicable to larger corporations.

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Why This Matters for Startups and MSMEs

The change is especially important for businesses operating in the ₹40–₹100 crore revenue band.

Previously, many startups and MSMEs found themselves in an uncomfortable middle ground:

• Too large to qualify for relaxed norms
• Too small to absorb the cost and complexity of full-scale corporate compliance

With the revised definition, these companies gain predictability and breathing room, allowing them to plan long-term growth without fear of sudden regulatory escalation.

The reform is also expected to:

• Encourage more businesses to formally incorporate
• Improve investor confidence through clearer governance pathways
• Support job creation and sustainable scaling

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Broader Impact on India’s Business Ecosystem

At an ecosystem level, the updated classification strengthens India’s entrepreneurial environment by reducing unnecessary friction during growth phases.

Lower compliance pressure means companies can:

• Allocate capital toward product development and expansion
• Invest more in talent and infrastructure
• Compete more effectively in domestic and global markets

The move sends a clear signal that the government is serious about:

• Supporting entrepreneurship
• Reducing regulatory overreach
• Building a more competitive, formalised economy

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Final Takeaway

By redefining small companies to include businesses with turnover up to ₹100 crore, the government has delivered a structural reform with long-term impact.

Rather than penalising growth, the new framework rewards scale with stability, making it easier for startups and MSMEs to mature into strong, well-governed enterprises.

For India’s startup ecosystem, this is not just a compliance tweak—it’s a meaningful step toward sustainable growth, higher formalisation, and stronger economic momentum.