Section 446B explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 446B is a short provision with a large effect: for four classes of company, every penalty under the Companies Act is halved, subject to caps.
It's also misapplied constantly — because it covers penalties but not fines, and because the classes are defined narrowly.
Half the specified penalty, capped at ₹2,00,000 for a company and ₹1,00,000 for an officer. Available to an OPC, small company, DPIIT-recognised start-up or Producer Company. It does nothing for provisions punishable with a fine or imprisonment — Sections 185, 186(13), 76A, 118(12), 167(2) and 447 are all untouched. And it doesn't reduce MCA additional fees.
The four eligible classes
| Class | Definition |
|---|---|
| One Person Company | A company with only one person as a member |
| Small company | Non-public company, paid-up capital not exceeding ₹4 crore, previous-year turnover not exceeding ₹40 crore — excluding a holding company, a subsidiary, a Section 8 company, or one governed by a special Act |
| Start-up company | A private company recognised as such under the DPIIT notification |
| Producer Company | As defined in Chapter XXIA |
Note what the start-up limb does. A DPIIT-recognised start-up gets the halved penalty even after it has outgrown small-company status — a funded company with paid-up capital above ₹4 crore still qualifies.
That's a distinct benefit and it's routinely overlooked, precisely at the growth stage where compliance is most likely to slip. Start-up relaxations →
Penalty, not fine
Section 446B applies where a penalty is payable. It does not apply where the provision prescribes a fine, imprisonment, or both.
| Provision | Nature | 446B relief |
|---|---|---|
| Sec 92(5) — annual return not filed | Penalty | Yes |
| Sec 137(3) — financial statements not filed | Penalty | Yes |
| Sec 12(8) — registered office default | Penalty | Yes |
| Sec 450 — general penalty | Penalty | Yes |
| Sec 90(11) — SBO register / return | Penalty | Yes |
| Sec 172 — directors chapter defaults | Penalty | Yes |
| Sec 42(10) — private placement | Penalty | Yes |
| Sec 185(4) — loan to director | Fine and/or imprisonment | No |
| Sec 186(13) — loans and investments | Fine and imprisonment | No |
| Sec 76A — deposits | Fine and imprisonment | No |
| Sec 118(12) — tampering with minutes | Imprisonment and fine | No |
| Sec 167(2) — acting after vacation of office | Imprisonment or fine or both | No |
| Sec 447 — fraud | Imprisonment and fine | No |
The line isn't arbitrary. The provisions converted to penalties are the compliance-type defaults. Those retained as offences involve dishonesty, self-dealing or public money — and Parliament kept the criminal limb on exactly those.
Three worked examples
1 — Annual return filed 500 days late by a small company.
Section 92(5): ₹10,000 + ₹100/day, capped at ₹2,00,000 for the company and ₹50,000 for an officer.
- Full penalty on the company: ₹10,000 + (500 × ₹100) = ₹60,000
- 446B: half = ₹30,000
- Full penalty on each officer: ₹60,000, capped at ₹50,000
- 446B: half = ₹25,000 per officer
But note: the additional fee of 500 × ₹100 = ₹50,000 on the portal is not reduced. Section 446B applies to penalties, not fees. Additional fees →
2 — Section 450 general penalty, 100-day continuing default, small company.
- Full: ₹10,000 + (100 × ₹1,000) = ₹1,10,000, within the ₹2,00,000 company cap
- 446B: half = ₹55,000
3 — Section 185 contravention by a small company.
- Section 185(4) prescribes a fine of ₹5,00,000–₹25,00,000 on the company, and imprisonment or fine on the officers.
- 446B does not apply. No reduction at all.
How the caps interact
Section 446B has its own caps — ₹2,00,000 for a company, ₹1,00,000 for an officer or other person — which sit as an outer ceiling on the reduced penalty.
Where the underlying section's own cap is lower, that lower cap governs the computation before halving. Where the underlying section has no cap, Section 446B supplies one.
Proving you qualify
The company has to actually be in one of the four classes at the relevant time.
- Small company — check paid-up capital and previous-year turnover against the audited financial statements, and confirm you're not a holding company, subsidiary, Section 8 company or governed by a special Act. Small company thresholds →
- Start-up — produce the DPIIT recognition certificate, valid at the relevant date.
- OPC — the single-member position is already on the record.
And claim it properly. A representation under Section 454 claiming 446B relief should attach the evidence — the audited financials or the DPIIT certificate — not merely assert the status. Adjudicating officers apply the relief when it's proved, not when it's mentioned.
Key takeaways
- Half the penalty, capped at ₹2,00,000 / ₹1,00,000.
- Four classes, and a start-up qualifies even after outgrowing small-company status.
- Penalties only. Fines and imprisonment are untouched.
- Additional fees are not reduced.
- A subsidiary is never a small company — but could still be a recognised start-up.
- Attach the evidence when you claim it.
Read next
- Penalties for Non-Compliance: Section-wise Chart
- Small Company: Definition, Thresholds and Benefits
- DPIIT-Recognised Startups: Company Law Relaxations
- Section 454: Adjudication of Penalties by the ROC
- Section 450: The General Penalty Provision
Disclaimer: Positions stated as on 4 September 2026. Small company thresholds and DPIIT criteria are amended periodically. Take professional advice.