Udyam registration is the government’s record that your business is a micro, small or medium enterprise (MSME). It is done online on the Udyam portal using the owner’s Aadhaar and the business’s PAN, with investment and turnover figures drawn from income tax and GST records. There is no government fee, and the registration does not need renewal, though it does need to be kept up to date.
Whether it is worth doing depends on what you sell and to whom. For a micro or small supplier to larger companies or the government, it is valuable. For a medium enterprise selling to consumers, the practical gain is smaller. If you would rather have it handled, our Udyam registration service files the application and checks your classification.
The limits from 1 April 2025
The classification test was raised by notification S.O. 1364(E), effective from 1 April 2025, as announced by the government. Both limits have to be met; crossing either one moves the business to the next category.
| Category | Investment in plant and machinery or equipment | Annual turnover |
|---|---|---|
| Micro | Up to Rs 2.5 crore | Up to Rs 10 crore |
| Small | Up to Rs 25 crore | Up to Rs 100 crore |
| Medium | Up to Rs 125 crore | Up to Rs 500 crore |
The same limits apply to manufacturing and services. Investment is measured on the written-down value of plant, machinery and equipment as shown in income tax records, not original cost. Export turnover is left out of the turnover figure, which helps exporters stay in a lower category. These computation rules come from the 2020 classification notification; check with your adviser that they still apply to your case.
For example, a garment unit with machinery worth Rs 2 crore and turnover of Rs 14 crore, of which Rs 5 crore is exports, counts Rs 9 crore of turnover and stays micro.
Benefits that have a legal or policy basis
Lists of MSME benefits online often mix law, bank marketing and old schemes. These are the ones you can point to a source for.
1. Protection against delayed payments (micro and small only)
The MSMED Act, 2006 protects micro and small suppliers:
- Section 15: the buyer must pay by the date agreed in writing, and that date cannot be more than 45 days from acceptance of the goods or services. Where nothing is agreed, payment is due within 15 days.
- Section 16: if the buyer pays late, it owes compound interest with monthly rests at three times the bank rate notified by the Reserve Bank.
- Section 18: the supplier can take the dispute to the Micro and Small Enterprises Facilitation Council of the state. Cases can be filed online on the MSME Samadhaan portal.
Medium enterprises do not get this protection. The buyer also needs to know you are registered, so put your Udyam number on quotations and invoices.
2. A tax reason for buyers to pay you on time
Under the Income-tax Act, 1961 (section 43B(h), from the 2023-24 year), a buyer could claim a deduction for an amount owed to a micro or small enterprise only in the year it was actually paid, if it was paid after the MSMED Act time limit. Large buyers began asking suppliers for Udyam certificates because of it. Check how the Income-tax Act, 2025 carries this rule forward before relying on it in a negotiation.
3. Priority sector lending
Bank loans to MSMEs count towards the priority sector lending targets that the Reserve Bank sets for banks, and lenders use the Udyam registration to classify the loan. Since July 2021, retail and wholesale traders can also register on Udyam for this purpose. Priority sector status does not set your interest rate, but it makes your loan one banks are pushed to give.
4. Government purchases
The Public Procurement Policy for Micro and Small Enterprises asks central ministries, departments and public sector undertakings to buy at least 25% of their annual procurement from micro and small enterprises, with part of that set aside for enterprises owned by SC/ST and women entrepreneurs. Registered MSEs also get tender documents free and are exempt from earnest money deposits. If government buyers are your target, combining Udyam with registration as a seller on GeM is the practical next step.
What Udyam does not do
- It is not a licence to trade and does not replace GST, FSSAI or other registrations.
- It does not entitle you to a loan or subsidy; schemes have their own eligibility rules.
- It is not compulsory for most businesses, but many benefits above depend on it.
Frequently asked questions
Can a business have more than one Udyam registration?
No. One enterprise has one registration, and all its activities and units are added to it.
We were registered before April 2025. Do we need to reapply?
No. Your classification is recalculated from your income tax and GST data under the new limits, which may move you to a lower category.
Is a GSTIN required?
PAN is needed in every case. A GSTIN is needed where the business is required to be registered under GST.
Complianto (complianto.in), operated by Mentorcorp Private Limited, is a private consultancy and is not affiliated with any government body. We do not issue official documents. We charge a professional fee for application assistance and advisory services. Applicants can apply directly to the government without our fees via the official portals: MCA (mca.gov.in), Income Tax (incometax.gov.in), GST (gst.gov.in), MSME (udyamregistration.gov.in), FSSAI (foscos.fssai.gov.in), Startup India (startupindia.gov.in), and IP India (ipindia.gov.in).
This article is general information, not legal or tax advice.
