There's several factors at play really. The simplest and shortest answer is growing parliamentary control. Following the Company's conquest of Bengal in 1757, there was gradually growing interest and pressure in Parliament to take control of a company that was functionally acting as a sovereign over territory that had quickly become larger than Britain itself. This culminated in the slow erasure of the company's corporate entity as it was regulated and transformed into an administrative entity. Its full windup had become a vague plan by the 1830s, but the revolt of 1857 pushed Parliament to formally dissolve the company's authority over India (it persisted as a legal entity until the formal dissolution of its charter in 1873 IIRC) and its other territorial holdings.
That's largely just the tl;dr. The details of the history can get... complicated. Mostly its a function of understanding the different pressures operating on the Company. Post 1757, the EIC found itself suddenly governing a level of territory that basically amounted to a country. This created a fundamental dissonance in its mission that it would struggle to resolve. Was it a mercantile interest motivated by trade and profit? Or was it an administrative entity with an obligation to govern? Balancing these interests was complicated, and often beyond the ability of the company to properly resolve.
The conquest of Bengal pushed the company into gradually spiraling costs, the most notable being its military. To conquer, then hold the country it had conquered required investment in a massive and growing military arm. These costs put strains on a company that had never been the most effective at managing its profits, partly because it could never really prevent its merchants from using the company to pursue private profits.
The obsession with profits was a second issue. India became a literal gold mine. Fortunes were made, and a career in India was quickly regarded as a fantastic vehicle to propel a middling middle class family into the landed aristocracy. And accurately so, since the wealth a private individual could make was ludicrously fantastic. People like Warren Hastings and Robert Clive would make so much money they could literally buy themselves peerages. Many minor peers could buy themselves upgrades. Baronets might become Earls. And at least one family looked to India to propel themselves to a Dukedom. The Wellesley brothers were convinced that if you just killed enough of the Empire's enemies, and won enough battles you could buy a duchy. They were right... though the elder brother miscalculated which sort of enemies you needed to kill. Indians were inadequate. So the younger brother advanced his career from India to killing numerous European enemies, and became Lord Wellington. I'm being a little cavalier here with the history, but my point is, lots of money was there to be made.
The lure of money, and the opulence of the nabobs (company servants and employees who made obscene fortunes) drew the ire of other Britons, both political (such as Edmund Burke, who raged against this phenomenon) and commercial (mercantile interests keen to end the Company's monopoly over trade to the lucrative East Indies) who began to build pressure on the government to take charge of the Company.
Another factor at play in Company finances vis a vis the military was the fact that the Company was expected, practically required, to support the British Government's strategic aims. Thus the Company's military, shipping and financial resources were sucked into bolstering the 7 years war and The Napoleonic Wars. These devastated company finances, and forced them to seek bailouts. The 7 years war and the long running conflict with the French for strategic supremacy for instance forced the company to seek bailouts at pivotal moments such as the 1770s. Naturally these moments allowed Parliamentarians keen to exert control to attach strings to the money. Thus you got the first of the Parliamentary enactments over the Company, the Regulating Act of 1773, followed by other acts such as Pitt's India Act of 1784. Eventually Parliament realized it would be convenient to just attach more strings to the Company's charter renewal (Parliament needed to reapprove their charter periodically) so they switched to 20 year charter renewals from 1793, and each subsequent iteration saw more and more Company autonomy chipped away in 1813 (when the trade monopoly in India was ended) 1833 (when all its trade monopolies were ended, and India was fully opened up to Britons), 1853 (the Company's Civil Service entrance procedures were reformed).
The Company's routine administrative systems were brought under the official purview of the government with the establishment of the Board of Control. Its members were privy councilors, and they created a separate power entity separate from the Company's directors and had oversight over all aspects of the Company's functioning. The Board of Control would eventually become the Secretariat of India, and it is why the India Office was always separate from the Secretary for the Colonies.
Other pressures, as I mentioned above, came from mercantile and religious interests. The Company controlled access to India. This outraged missionary groups who wanted unfettered access to the pagan and heathen Indians for conversion. The Company hated this, because missionaries invariably ended up causing bad blood and revolts. Anglican Missionaries in India would, on the whole, remain pretty unsuccessful, but they would mount enormous pressure in England to grant them access to the Indies. Similarly mercantile interests who were shut out, such as textile barons in England, also mounted pressure to end the Company's monopolies and throw open the east to all British merchants.
The loss of America played a role too. Following the Revolution, and the loss of its western colonies, the British Imperial gaze was drawn more and more to the East. India and the Far East represented a site where imperialism could (and did) continue, and the growing number of Crown colonies in the region naturally created administrative tensions that increased pressure on the Company. A linked issue was military glory. One of the first concessions the Company was forced to make was to cede to Parliament and British politicians the office of Governor-General in India. While Warren Hastings was a long standing company man, after him the British government preferred aristocrats. Aristocrats who, invariably, would show up in India and often embark on major administrative reforms or military campaigns (or both) pursuing various ideological agendas that had little to do with pure corporate interest, much to the chagrin of the Company. Thus you had Cornwallis, desperate to rescue his reputation after the Revolution. Wellesley, eager to build for himself an imperial legacy and thus embarked in a series of devastatingly expensive conquests over India that massively increased the cost of administration. Lord Bentinck who went on a major Utilitarian reformist spree that deepened the administrative structure and increased costs.
By 1833, the EIC had basically stopped functioning as a Company anyway. It was purely an administrative body, but one that was notionally still independent, and one that still had shareholders, a court of directors, shareholders governing bodies (the court of proprietors) and paid out dividends. But since it was no longer working as a company, from about 1833 to 1857, it was on an inevitable death spiral. The Company's last major attempt to retain its corporate identity was a losing battle it fought from (depending on who you ask) 1793 or 1813 to 1833.
It was all of these factors that combined to basically gradually destroy the Company's corporate identity and eventually have it taken over by the British Government. In the last 20 odd years of its existence however, it was, for all practical purposes, an arm of the British government anyway. And much of this blurred distinction between profit and administration never vanished. Even after India became a Crown Colony, it would often pursue strategic projects aimed at creating wealth for British shareholders and investors. The Indian railway network for instance was built in such a way, allowing investors to make almost guaranteed profits through their investments in the projects by leveraging the Indian government's resources as security.
Some resources you'd find useful exploring this.
Nicholas Dirks The Scandal of Empire
P. J Marshall The Impeachment of Warren Hastings
H. V Bowen The Business of Empire
Lucy Sutherland The East India Company in Eighteenth-century Politics
Robert Travers Ideology and Empire in Eighteenth-Century India
Thomas Metcalf Ideologies of the Raj