A novel digital companding technique is proposed for light fidelity (LiFi) based on orthogonal frequency division multiplexing (OFDM). The technique builds on the principles of nonlinear companding. During this study, the performance of the two main companding transforms (μ-law, nonlinear exponential) are compared in terms of PSD with prismal shaped companding as well as BER of all of them. Orthogonal frequency division multiplexing (OFDM) signals suffer from the problem of a high peak-to-average power ratio (PAPR) that complicates the design of the analog front-end of the system which will be analyzed and improved. Simulation is done by using optimum parameters that achieve efficient PAPR reduction for each companding transform and BER also. Both PAPR and moderate performance degradation are critical challenges for a well-designed companding scheme. To obtain efficient PAPR reduction in OFDM systems, this paper proposes a new NCT scheme.