The Union government is all set to do away with jail term in over 40 of the 66 sections under the Companies Act 2013, reported The Times of India. The ministry of corporate affairs is also looking to lower the penalties on small companies, the paper reported, citing people aware of the matter.

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The government is looking to introduce a bill to amendment the law in the upcoming winter session of the parliament, the report said. The changes, if implemented, are expected to benefit around 800,000 of the 1.1 million registered companies in the country with a turnover of up to Rs 2 crore and a paid-up capital of less than Rs 50 lakh, the report added.

According to the report, the new amendments will allow companies and their executives to avoid persecution or jail term by paying up penalties. Once the amendments are approved, civil offences will be dealt through Ministry of Corporate Affairs' in-house mechanism led by the registrar of companies.

The new steps and changes are being discussed by the Company Law Committee, headed by corporate affairs secretary Injeti Srinivas, The Times of India report added. The development comes not long after the government amended the law and reduced the number of provisions that attract jail term from 81 to 66.