New Delhi, Sept 16 (KNN) The Ministry of Corporate Affairs (MCA) has announced latest revision by increasing thresholds for paid up Capital and turnover for small companies from not exceeding Rs 2 crore to Rs 4 crore and from not exceeding Rs 20 crore to Rs 40 crore.

The notification was released on Thursday and it is step by the government towards ease of doing business and ease of living for the corporates. 

Earlier, definition of “small companies” under the Companies Act, 2013 was revised by increasing their thresholds for paid up capital from not exceeding Rs 50 lakh to Rs 2 crore and turnover from not exceeding Rs 2 crore to Rs 20 crore.

In support of the revision, Federation of Indian Micro and Small & Medium Enterprises (FISME) said, “We welcome the 100% increase in the thresholds of paid up capital and turnover for the purpose of defining Small Company. As these thresholds were set more than a decade back an updation was needed to accommodate inflation. MSME definition also has been steeply revised upwards. The investment in plant and machinery of a Small enterprise under MSED Act which was upto Rs 2 crore has been revised to Rs 5 crore.”

Some of the various measures taken by the Ministry included decriminalisation of various provisions of the Companies Act, 2013 & the LLP Act, 2008, extending fast track mergers to start ups, incentivising incorporation of One Person Companies (OPCs) etc.

Reflecting on how small companies represent the entrepreneurial aspirations and innovation capabilities of lakhs of citizens, MCA said in a statement that small businesses contribute to growth and employment in a significant manner.

It emphasised on government’s commitment to take measures which create a more conducive business environment for law-abiding companies, including reduction of compliance burden on such companies.

The revised definition for small companies is expected to reduce compliance burden and benefit the companies.

As there would be no need to prepare cash flow statement as part of financial statement and there will be lesser penalties for small companies.

There will be advantage of preparing and filing an Abridged Annual Return and mandatory rotation of auditor will not be required.

With the latest revision, annual return of the company can be signed by the company secretary, or where there is no company secretary, by a director of the company.  (KNN Bureau)