Budget 2021: No restriction on 1-person co's paid up capital, turnover

Finance Minister Nirmala Sitharaman on Monday announced that there will be no restrictions on paid up capital and turnover of one-person companies to allow such companies to grow.

The move will help startups and innovators, the finance minister said while presenting Budget 2021-22.

Besides, she also announced reduction in residency limit for Indian citizens to set up one-person companies to 120 days from 182 days.

"I propose to incentivize the incorporation of One Person Companies (OPCs) by allowing OPCs to grow without any restrictions on paid up capital and turnover, allowing their conversion into any other type of company at any time, reducing the residency limit for an Indian citizen to set up an OPC from 182 days to 120 days and also allow Non Resident Indians (NRIs) to incorporate OPCs in India," Sitharaman said.

The government also announced revision in definition of small companies under the Companies Act, 2013 by increasing their thresholds for paid up capital from "not exceeding Rs 50 lakh" to "not exceeding Rs 2 crore" and turnover from "not exceeding Rs 2 crore" to "not exceeding Rs 20 crore".

The move will benefit more than 2 lakh companies by easing their compliance requirements, the finance minister said.

Live blog for Union Budget

Check Budget highlights here