What is Udyam / MSME registration?
Udyam registration is the official MSME registration introduced by the Ministry of Micro, Small and Medium Enterprises. It replaced the earlier Udyog Aadhaar Memorandum and is the single, paperless registration that recognises a business as a Micro, Small or Medium Enterprise. The registration issues a permanent Udyam Registration Number (URN) and an e-certificate.
What is the Udyam limit? MSME investment and turnover thresholds (2026)
Short answer: under the revised classification effective 1 April 2025, which still applies in 2026, the Udyam limit is Rs 2.5 crore investment and Rs 10 crore turnover for a Micro enterprise, Rs 25 crore and Rs 100 crore for a Small enterprise, and Rs 125 crore and Rs 500 crore for a Medium enterprise.
The MSME classification is a composite criterion — both the investment in plant and machinery and the annual turnover must be within the limit for the relevant category. Crossing either ceiling pushes the enterprise into the next category.
| Category | Investment (up to) | Turnover (up to) |
|---|---|---|
| Micro | Rs 2.5 crore | Rs 10 crore |
| Small | Rs 25 crore | Rs 100 crore |
| Medium | Rs 125 crore | Rs 500 crore |
Source: Ministry of MSME notification S.O. 1364(E) dated 21 March 2025, effective 1 April 2025, confirmed by the Ministry's circular of 24 October 2025.
How are investment and turnover calculated for Udyam?
Short answer: both figures come from your income tax and GST data. Investment is the investment in plant and machinery or equipment taken from the income tax return of the previous year, and turnover is taken from income tax and GST records, excluding exports.
- Investment means plant and machinery or equipment as understood under the Income-tax Rules, excluding land and building and furniture and fittings, and excluding certain items listed in the notification. It is linked to the income tax return of the previous year.
- New enterprises with no income tax return yet can self-declare investment based on purchase invoice value excluding GST, until the end of the financial year in which they file their first return.
- Turnover is linked to income tax and GST data. Exports of goods or services are excluded, which helps export-oriented businesses stay within a smaller category.
- All GSTINs under one PAN are treated collectively as one enterprise, and their turnover and investment are added together.
These calculation rules come from notification S.O. 2119(E) of 26 June 2020, which continues to govern the method while S.O. 1364(E) sets the current limits.
What happens when you cross an MSME limit?
Short answer: crossing either the investment or the turnover ceiling moves you up a category, but you keep your existing status until one year after the close of the year of registration. Moving down needs both figures below the limit, and takes effect from 1 April of the next financial year.
Update the Udyam registration with the previous year's income tax and GST figures each year; the portal reclassifies the enterprise from that data. Track the figures before year-end if the category matters for a bank facility, a scheme or a tender.
What is the 45-day MSME payment rule?
Short answer: under section 15 of the MSMED Act, 2006, a buyer must pay a micro or small enterprise within the agreed period, which cannot exceed 45 days, or within 15 days where there is no written agreement. Late payment carries compound interest under section 16, and the buyer can deduct the expense for income tax only when it is actually paid, under section 37 of the Income-tax Act, 2025 (formerly section 43B(h) of the Income-tax Act, 1961).
The rule protects micro and small enterprises only, not medium enterprises. For suppliers, the Udyam certificate is the evidence buyers need to apply it; for buyers, track MSME payables by due date so that year-end payables do not turn into a tax disallowance.
What are the benefits of MSME registration?
- Collateral-free credit under the Credit Guarantee Scheme and priority-sector lending from banks.
- MSME Samadhaan / delayed-payment protection — buyers must pay a registered MSME within 45 days, with compound interest on delayed payments.
- Interest subvention and subsidy schemes, including credit-linked subsidies and reimbursement of ISO/patent fees.
- Preference in government tenders — exemption from EMD, reservation of items and a 25% procurement target from MSEs (with sub-targets for SC/ST and women-owned MSEs).
- Easier access to TReDS bill discounting and listing benefits under various State industrial policies.
How do I register on the Udyam portal? (step by step)
- Visit the official Udyam Registration Portal and choose "For New Entrepreneurs who are not Registered yet as MSME".
- Verify Aadhaar of the proprietor / managing partner / authorised signatory via OTP.
- Enter PAN and business details — organisation type, GSTIN, address, bank account, NIC activity code, investment and turnover.
- Submit — the URN and e-certificate are issued instantly, with no fee and no documents to upload.
Who should register for Udyam?
Any manufacturing or service enterprise organised as a proprietorship, partnership, LLP, private limited company, HUF, society, trust or co-operative can register, as long as it is within the Medium-enterprise ceiling. It is especially useful for SMEs raising bank credit, dealing with PSUs / large corporates, or bidding for tenders. New businesses are best advised to register immediately after company formation and GST registration.