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Easing Audit Rules
A proposal within India's Companies (Amendment) Bill, 2026, could significantly reduce compliance burdens for smaller businesses by easing mandatory audit requirements. The Bill intends to introduce a new Section 139(12) into the Companies Act, 2013, allowing the government to exempt certain company types from mandatory auditor appointments.
Broadening the 'Small Company' Definition
This regulatory relief is closely tied to a planned expansion of the definition of a "small company." The proposal seeks to raise the paid-up capital threshold from the current ₹10 crore to ₹20 crore and increase the turnover limit from ₹100 crore to ₹200 crore. This adjustment is expected to include more companies in simplified compliance measures.
Experts Call for Clear Rules and Safeguards
Experts, including Zubin Billimoria, President of the Bombay Chartered Accountants Society, stress the importance of defining clear eligibility criteria. Billimoria noted that it remains to be seen whether the expanded 'small company' thresholds will directly apply to audit exemptions or if lower limits will be prescribed. He suggests safeguards to focus the exemption on unlisted private firms, excluding those with listed debt, public deposits, or in regulated industries.
Benefits and Alternative Oversight
Exempting smaller entities from mandatory audits offers several benefits, such as reduced compliance costs and a lower administrative burden. This mirrors relaxations already in place for small companies. Experts also suggest alternative oversight mechanisms, like self-certified financial statements signed by a director and a qualified accountant, with regulators retaining the power to review and revoke exemptions if necessary.