Udyam Registration and the New MSME Limits: Is Your Business Still Micro or Small?
From 1 April 2025, a micro enterprise can have up to ₹2.5 crore investment and ₹10 crore turnover, a small enterprise ₹25 crore and ₹100 crore, and a medium enterprise ₹125 crore and ₹500 crore, meeting both limits. Micro and small status brings the 45-day payment protection.
Your MSME category decides whether buyers must pay you in 45 days, which bank schemes you qualify for, and whether you can use the delayed-payment remedies. The limits were raised from 1 April 2025, so many businesses that had "graduated" are back in a smaller category.
The limits from 1 April 2025
| Category | Investment in plant, machinery or equipment | Annual turnover |
|---|---|---|
| Micro | Up to ₹2.5 crore | Up to ₹10 crore |
| Small | Up to ₹25 crore | Up to ₹100 crore |
| Medium | Up to ₹125 crore | Up to ₹500 crore |
A business must meet both the investment and the turnover limit for a category. Exports are excluded from turnover for this purpose.
How Udyam works
- ✓Registration is online, free, and based on PAN and Aadhaar.
- ✓Investment and turnover data are taken from income-tax and GST records, and the classification is updated automatically each year.
- ✓Keep the registration updated if your activity, address or ownership changes.
What the category unlocks
| Benefit | Micro | Small | Medium |
|---|---|---|---|
| Payment within 45 days by buyers, with interest on delay | Yes | Yes | No |
| Buyer loses tax deduction if it pays late | Yes | Yes | No |
| Delayed-payment cases on the MSME ODR portal | Yes | Yes | No |
| Priority-sector lending and collateral-free credit schemes | Yes | Yes | Yes, for many schemes |
| Government procurement preferences | Yes | Yes | Some |
Traders can register on Udyam, but only for priority-sector lending. They do not get the 45-day payment protections.
A worked example
A Morbi sanitaryware maker has ₹18 crore invested in machinery and ₹80 crore turnover. Under the old limits (₹10 crore investment, ₹50 crore turnover for small), it was medium. Under the new limits, it is small. It now writes its Udyam number and the 45-day term on every invoice, and its large buyers have started paying faster.
Frequently asked questions
Does land and building count as investment?
No. Investment means plant, machinery or equipment, valued as per the rules.
What if we cross a limit during the year?
Reclassification follows the annual data. Moving up a category takes effect as per the rules after the year's data is processed.
Is Udyam the same as GST registration?
No. They are separate registrations, though Udyam uses GST and tax data.
Sources
- ✓Revised MSME classification criteria from 1 April 2025, Mondaq
- ✓Broadening the MSME landscape: impact of revised limits, Vinod Kothari
This is a summary, not legal advice. Confirm your classification on the Udyam portal.
Written by
Founder, Airwix Technologies (Sleet)
Vatsal Sutariya is the founder of Airwix Technologies in Ahmedabad, the company that builds Sleet: SleetHR for HR and payroll, and Sleet Accounting for GST billing and books. He writes about GST, invoicing, business tax and choosing software for Indian businesses, and checks each rule against the official notification before it is published.
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