Last reviewed: 25 September 2026. Over 7.83 crore enterprises had registered on the Udyam Registration Portal and Udyam Assist Platform by 28 February 2026, per the MSME Ministry — because that one free registration is now the gateway to almost every MSME benefit in India: payment protection from customers, priority-sector loans, collateral-free credit guarantee, tender preferences and Budget schemes. With the classification limits enlarged from 1 April 2025 and Union Budget 2026-27 building a ₹10,000 crore SME Growth Fund on top of the Udyam base, businesses that are still unregistered are leaving real money and protection on the table. Here is the full 2026 position: the revised limits, how investment and turnover are actually measured, the registration steps, and the rules when you outgrow a category.
Revised MSME limits from 1 April 2025
Notification S.O. 1364(E) dated 21 March 2025 amended the base classification notification S.O. 2119(E) dated 26 June 2020, raising the investment ceilings 2.5 times and doubling the turnover ceilings with effect 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 |
The criteria are composite: to sit in a category you must be within both ceilings, and crossing either one pushes you to the next higher category. Conversely, you drop to a lower category only when you fall below both of its ceilings.
How investment and turnover are actually measured
This is where most classification errors happen. The portal does not ask your opinion — it reads your filings.
| Measure | Basis | Key exclusions |
|---|---|---|
| Investment | Written-down value of plant & machinery or equipment as per the ITR of the previous financial year. A new enterprise self-declares (purchase invoice value, net of GST) until the end of the financial year in which it files its first ITR. | Land and building, furniture and fittings; pollution-control, research & development and industrial-safety equipment. |
| Turnover | Figures linked to your GST returns and ITR through PAN/GSTIN; new enterprises self-declare until the data flows through. | Exports of goods or services are excluded while computing turnover for classification. |
The exporter advantage. Because export turnover is excluded, an engineering exporter billing ₹18 crore in FY 2025-26 — ₹11 crore exports, ₹7 crore domestic — counts only ₹7 crore for classification. With plant & machinery WDV of ₹1.9 crore, it remains a micro enterprise, keeping the strongest payment-protection and lending benefits while it scales exports. Exporters using our LUT and GST refund route should claim this classification benefit too.
Worked example — which category are you? A Thane manufacturer has plant & machinery WDV of ₹3.2 crore per its FY 2025-26 ITR and turnover of ₹9.4 crore, all domestic. Turnover is within the micro ceiling (₹10 crore) but investment crosses ₹2.5 crore — so the unit is classified small, not micro. Both needles must stay inside the micro band to be micro.
What Udyam registration actually gets you
| Benefit | What it means in practice |
|---|---|
| Delayed-payment protection | Buyers must pay a registered micro or small enterprise within 15 days (no written agreement) or a maximum of 45 days (written agreement) under Section 15, MSMED Act. Delay attracts compound interest at three times the RBI bank rate, claimable through MSME Samadhaan. |
| Section 37(2)(g) of the Income-tax Act, 2025 (old 43B(h)) leverage | Your customers lose their income-tax deduction until they actually pay you if they breach the 15/45-day limit. From tax year 2026-27 this rule sits in section 37(2)(g) of the 2025 Act; dues outstanding at 31 March 2026 are still tested under section 43B(h) of the 1961 Act for FY 2025-26 — see our 43B(h) buyer-risk guide. Registered micro and small suppliers get paid first. |
| Priority-sector lending | Bank loans to Udyam-registered MSMEs qualify as priority sector, improving access and pricing of working capital. |
| Credit guarantee (CGTMSE) | Collateral-free loans backed by guarantee cover for limits up to ₹10 crore (ceiling doubled from ₹5 crore). |
| Tenders and procurement | 25% of annual procurement by central ministries and PSUs is reserved for micro and small enterprises, with tender-fee and EMD exemptions on government tenders. |
| TReDS invoice discounting | Discount receivables from large buyers online; Budget 2026-27 mandates CPSE purchases through TReDS and adds guarantee-backed discounting. |
| Schemes and subsidies | PMEGP, interest-subvention and state-scheme eligibility generally keys off the URN; informal micro units can start via the Udyam Assist Platform through their bank. |
Budget 2026-27 has raised the stakes: a ₹10,000 crore SME Growth Fund, TReDS mandated for CPSE purchases from MSMEs, and removal of the ₹10 lakh per-consignment value cap on courier exports — a direct win for small exporters (see the PIB note on Budget 2026-27 for MSMEs; CBIC operationalised the courier-export reforms from 1 April 2026). Our Budget 2026-27 MSME action checklist maps these to concrete to-dos.
How to register on the Udyam portal: step by step
- Go to udyamregistration.gov.in → "For new entrepreneurs who are not registered yet as MSME".
- Enter the Aadhaar of the proprietor (proprietorship), managing partner (partnership), karta (HUF) or authorised signatory (company/LLP/trust/society) and validate by OTP.
- Validate PAN — for companies, LLPs, co-operatives, societies and trusts, the organisation's PAN and GSTIN go in along with the signatory's Aadhaar.
- Fill enterprise details: name, type, location of plant/units, bank details, and National Industry Classification (NIC) codes for every activity — manufacturing, services or both, all under one registration.
- Investment and turnover fields auto-populate from ITR/GST data where available; new enterprises declare figures (they are verified against later filings).
- Submit with a final OTP. The permanent Udyam Registration Number is issued and the e-certificate with QR code follows by email.
- Download the certificate and share it with your buyers and bankers; add the URN to invoices so customers can tag you correctly for section 37(2)(g) (old 43B(h)).
Foreign-owned companies qualify too. An Indian subsidiary of a foreign company registers on the same terms as any other company, using its own PAN and the Aadhaar of an authorised signatory, and gets the same payment-protection and lending benefits within the limits. If you are setting up or running an India subsidiary, our foreign subsidiary accounting and FEMA service covers Udyam alongside the ROC and RBI filings.
One registration per enterprise. A PAN gets one URN covering all branches and activities — do not file a second registration for a new unit; update the existing one. And register only on the government portal: look-alike private websites charge for what is free and are not the official record.
Traders: registration allowed, benefits limited
Wholesale and retail traders can register on Udyam (Office Memorandum dated 2 July 2021), but their benefits are restricted to priority-sector lending. The MSMED Act's delayed-payment machinery — and hence the practical force of section 37(2)(g) (old 43B(h)) — is aimed at manufacturers and service providers. Trading concerns should still register: cheaper, better-classified bank credit is a real benefit on its own.
Crossing a limit: reclassification rules
- Moving up (micro → small → medium): the change reflects on the portal, but under Notification S.O. 4926(E) dated 18 October 2022 you continue to enjoy all non-tax benefits of your earlier category for three years from the date of upward change — a cushion for growing units.
- Moving down: the lower category applies only from 1 April of the financial year following the year in which the change occurred.
- Data updates itself: the portal refreshes classification from your ITR and GST filings each year — so review your Udyam status annually after filing, and keep email/mobile current so you see the reclassification intimation.
Common mistakes to avoid
- Paying an agent website for a "certificate" — the official portal is free; some paid look-alikes also file wrong NIC codes you inherit.
- Assuming the certificate proves your current category — buyers and banks read the latest classification, which moves with your ITR/GST data.
- Counting exports in turnover and wrongly concluding you have outgrown MSME status.
- Including land, building or furniture in "investment" and over-declaring.
- Taking a second URN for a new branch instead of updating the existing registration.
- Suppliers not quoting their URN and category to customers — you only get section 37(2)(g) (old 43B(h)) priority if buyers can identify you as micro/small; if you registered at incorporation, cross-check it against our first-year compliance checklist.
Frequently asked questions
Is Udyam registration mandatory for MSMEs?
It is not compulsory for every business, but without it you cannot claim MSME benefits — delayed-payment protection under the MSMED Act, priority-sector lending, credit guarantee cover or tender preferences. Buyers also ask suppliers for Udyam status because of section 37(2)(g) of the Income-tax Act, 2025 (old 43B(h)), which delays their tax deduction for late payments to micro and small suppliers.
What are the MSME classification limits in 2026?
Micro: investment up to ₹2.5 crore and turnover up to ₹10 crore. Small: ₹25 crore and ₹100 crore. Medium: ₹125 crore and ₹500 crore. These limits apply from 1 April 2025, and crossing either ceiling moves the enterprise to the next category.
Is there any fee or document upload for Udyam registration?
No. Registration on the official portal udyamregistration.gov.in is free, fully online and Aadhaar-OTP based, with no documents to upload. Websites that charge a fee for a certificate are private agents, not the government portal.
Are exports counted in turnover for MSME classification?
No. Export turnover of goods and services is excluded while computing turnover for classification, so an exporter can retain micro or small status — and its benefits — despite a much larger total turnover.
Can traders register under Udyam?
Yes. Wholesale and retail traders have been allowed to register since 2 July 2021, but their benefits are restricted to priority-sector lending. The wider MSMED Act benefits, such as delayed-payment protection, are aimed at manufacturers and service providers.
What happens when my enterprise crosses a limit?
It is reclassified to the higher category, but non-tax benefits of the earlier category continue for three years from the date of upward change. On a downward change, the lower category applies from 1 April of the financial year following the year of change.
We assist with Udyam registration and updation, classification review of your ITR-linked investment and turnover, 43B(h) supplier/buyer mapping, and using your MSME status in bank and tender files.
MSME Registration MSME & Udyam Advisory Schedule a callDisclaimer: This article is for general guidance only and is not a substitute for advice on your specific facts and the latest law. Figures verified as on 25 September 2026 — MSME classification per S.O. 1364(E) dated 21.03.2025 read with S.O. 2119(E) dated 26.06.2020; reclassification per S.O. 4926(E) dated 18.10.2022; Budget 2026-27 announcements per PIB. Income-tax references: section 37(2)(g) of the Income-tax Act, 2025 from tax year 2026-27; section 43B(h) of the 1961 Act for FY 2025-26 and earlier. Please consult before acting.