If a bank, a buyer or a tender portal has ever asked you for an MSME certificate, that certificate comes from Udyam registration. From 1 April 2025 the qualifying limits were raised sharply, so many businesses that were once too large now qualify.
This guide covers what Udyam registration is, who can register, the revised limits, why it is worth doing, the exact steps on the official portal, the annual update, and the 45-day payment rule from both sides: the supplier who wants to be paid, and the buyer whose tax deduction depends on paying on time. If you want it done for you, Regikart files Udyam registration for ₹499.
Quick answers
- What it is: the official online registration that classifies a business as a Micro, Small or Medium Enterprise under the MSMED Act, 2006.
- Cost: no government fee. The only official portal is udyamregistration.gov.in.
- Limits from 1 April 2025: Micro up to ₹2.5 crore investment and ₹10 crore turnover; Small ₹25 crore and ₹100 crore; Medium ₹125 crore and ₹500 crore.
- Who can register: proprietorships, partnerships, LLPs, companies, HUFs, co-operative societies, trusts and other associations of persons, in manufacturing, services or trade.
- 45-day rule: a buyer must pay a micro or small supplier within 45 days under a written agreement, or 15 days without one. Medium enterprises are not covered.
- Tax link: for FY 2025-26, section 43B(h) of the Income-tax Act, 1961 lets the buyer deduct a late-paid amount only in the year it is actually paid. From Tax Year 2026-27, the Income-tax Act, 2025 carries the same rule.
What Udyam registration is
Udyam registration is the official process of recognising an enterprise as a Micro, Small or Medium Enterprise (MSME) under the Micro, Small and Medium Enterprises Development Act, 2006, through the Government of India's Udyam portal. On registration the enterprise receives a permanent 12-digit Udyam Registration Number (URN) and a digital e-certificate.
The portal pulls investment data from your income tax records and turnover data from your GST returns, and recalculates your category every financial year. Udyog Aadhaar was replaced by Udyam in July 2020; if you still hold only an old number, see our guide to Udyog Aadhaar to Udyam migration.
Key terms: MSME, URN, composite criterion, Udyam Assist
- MSME: Micro, Small and Medium Enterprise, the umbrella category defined under the MSMED Act, 2006.
- URN: Udyam Registration Number, the unique 12-digit identifier issued on registration, with lifetime validity.
- Composite criterion: classification based on investment and turnover together, not either one alone.
- Udyam Assist Platform: a separate route for informal micro enterprises with no PAN or GST registration, through designated agencies. See Udyam Assist against Udyam registration.
Who can register
Any enterprise engaged in manufacturing, services or trade can register, if it falls within the limits. That includes:
- Sole proprietorships
- Partnership firms and LLPs
- Private and public limited companies
- Hindu Undivided Families (HUFs)
- Co-operative societies, trusts and other associations of persons
Since July 2021, retail and wholesale traders are eligible too: see which traders can register under Udyam. A salaried person can register a genuine side business with its own PAN. For entity-specific points, see Udyam for a proprietorship, partnership or company.
Registration is voluntary, but in practice you need it for collateral-free credit, tender preferences and the 45-day payment protection.
The revised MSME limits from 1 April 2025
The limits were revised by notification S.O. 1364(E) dated 21 March 2025, effective 1 April 2025. Investment ceilings went up 2.5 times and turnover ceilings doubled.
| Category | Investment in plant, machinery or equipment up to | Turnover up to |
|---|---|---|
| Micro | ₹2.5 crore | ₹10 crore |
| Small | ₹25 crore | ₹100 crore |
| Medium | ₹125 crore | ₹500 crore |
The composite criterion: both investment and turnover
Both limbs must be within the limit for a category. If either investment or turnover crosses the ceiling, the enterprise moves up a category. Our post on the revised MSME classification limits works through examples.
Old against revised limits
| Category | Old turnover limit | Revised turnover limit |
|---|---|---|
| Micro | ₹5 crore | ₹10 crore |
| Small | ₹50 crore | ₹100 crore |
| Medium | ₹250 crore | ₹500 crore |
Existing registrations do not need to re-register: the revised limits apply automatically.
What happens if you grow past the limits
Your category is recalculated each year from ITR and GST data. Cross a Micro ceiling and you become Small; cross a Small ceiling and you become Medium. The practical cost of moving to Medium is that the 45-day payment protection no longer covers you, and some credit schemes reserved for micro and small enterprises stop applying. Cross the Medium ceiling and the enterprise is no longer an MSME.
Why it is worth registering
Credit: collateral-free schemes and priority sector lending
Under the CGTMSE credit guarantee scheme, banks can lend to micro and small enterprises without collateral or a third-party guarantee. The Union Budget 2025-26 raised the guarantee cover from ₹5 crore to ₹10 crore. The lending decision still rests with the bank, and a valid Udyam certificate is usually part of the application. See our CGTMSE collateral-free loan guide. MSME loans also count as priority sector lending for banks. For a loan application, a project report prepared by a CA helps.
Government tenders
Registered MSMEs get exemption from prior experience, turnover criteria and earnest money deposit on GeM, and reserved categories of government procurement open up to them. See GeM registration for MSMEs.
The 45-day payment rule, and what it costs a buyer
Under section 15 of the MSMED Act, a buyer must pay a micro or small supplier 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 for the buyer it delays the tax deduction (see below). That makes MSME invoices the ones buyers pay first. Suppliers can also discount invoices on TReDS.
Recognised proof of MSME status
The certificate is accepted proof of MSME status for banks, buyers and government agencies. It sits alongside other registrations you may need: GST registration, Startup India recognition, IEC registration for exporters and a trade licence from your local body.
The legal framework
Udyam registration operates under the MSMED Act, 2006, administered by the Ministry of Micro, Small and Medium Enterprises. Section 15 of that Act sets the payment period, section 16 the interest on delay, and the MSE Facilitation Council hears disputes.
The income tax link is separate. For FY 2025-26, section 43B(h) of the Income-tax Act, 1961 allows a buyer to deduct an amount payable to a micro or small enterprise, if not paid within the section 15 period, only in the year it is actually paid. From Tax Year 2026-27, the Income-tax Act, 2025 carries the same actual-payment rule. MSME Form I under the Companies Act runs in parallel, requiring companies to disclose the same overdue amounts to the Ministry of Corporate Affairs.
Documents and prerequisites
- Aadhaar number of the proprietor, managing partner, Karta or authorised director (mandatory).
- PAN of the enterprise.
- GSTIN, where the business is required to be registered under GST.
- Bank account details of the enterprise.
- The correct NIC code for your activity: see choosing the NIC code for Udyam.
- Investment and turnover figures, which the portal largely fetches itself.
How to register on udyamregistration.gov.in, step by step
- Go to udyamregistration.gov.in. It is the only official route. Lookalike sites charge a fee for a free service.
- Choose your applicant type: the option for new entrepreneurs not yet registered as MSME.
- Enter Aadhaar and validate by OTP: the Aadhaar of the proprietor, managing partner, Karta or authorised director.
- Add PAN and GST details. The portal validates them and fetches investment and turnover figures from linked records.
- Fill the enterprise details: name, type, address, bank account, NIC code for the main activity and number of employees.
- Submit. Accept the self-declaration and submit with the final OTP. The e-certificate with a QR code is generated and emailed, usually within minutes.
It is free
There is no government fee for Udyam registration, and the Ministry's portal says so. Anyone charging a "government fee" is misleading you. The only cost is optional professional help: Regikart's fee is ₹499 plus GST at 18%, which covers a check of your category under the revised limits before filing.
The annual update, and what happens if you skip it
The URN never expires, but every registered enterprise must update its turnover, investment and ownership details on the portal each year. Skip it and the registration no longer reflects your business, which can hold up a loan, a tender or a buyer's MSME check until the update is filed. Our guide to the Udyam annual update covers the steps.
MSME Form I: what buyers owe you must report
A company that owes a micro or small supplier for more than 45 days must report it to the Ministry of Corporate Affairs in MSME Form I every half year: by 31 October for April to September, and by 30 April for October to March. The return covers the amount due and the reason for the delay, so a customer's overdue invoice to you appears in its filing with the MCA.
Recovering a delayed payment
If a buyer pays late, section 16 of the MSMED Act makes it liable for compound interest at three times the bank rate notified by the Reserve Bank of India. If the buyer still does not pay, you can file a reference with the MSE Facilitation Council through the MSME Samadhaan portal.
A formal recovery notice citing sections 15 and 16 often settles it before a reference is needed. Our guide to MSME Samadhaan and the Facilitation Council covers the process. The protection covers micro and small enterprises only.
If you are the buyer: section 43B(h) and the payment calendar
Section 43B(h) of the Income-tax Act, 1961 applies up to FY 2025-26; from Tax Year 2026-27 the Income-tax Act, 2025 carries the same rule. The deduction is not lost: it is allowed in the year of actual payment. There is no permanent loss, only a timing hit, but a sudden rise in taxable profit can bring an unplanned tax demand.
What "paid" actually means
| When the invoice is paid | Year the expense is deducted |
|---|---|
| Within the 15 or 45-day period | The year the expense is incurred |
| After the 15 or 45-day period, but before 31 March of the same year | The same year, because it was paid in that year |
| Still unpaid on 31 March | The year of actual payment |
The test runs per invoice, not in aggregate. One stuck invoice shifts one expense; several stuck invoices add up to a material rise in taxable profit. It applies only to suppliers that are micro or small enterprises, not medium ones.
A compliant workflow
- Request the Udyam certificate at vendor onboarding, not later, and record the category.
- Tag micro and small vendors in your accounting system or ERP.
- Run a 45-day ageing report on the 25th of every month, and clear anything within three days of the cut-off.
- If you dispute an invoice, document the dispute in writing before the 45-day mark.
- Before 31 March, clear every overdue MSME invoice you can, so the deduction stays in the current year.
Our tax planning team reviews MSME dues before year end, and our income tax return filing team reports the disallowance and its later deduction correctly.
Common mistakes
- Paying a "government fee". The official process is free, and only udyamregistration.gov.in is official.
- Skipping the annual update. The details must be updated every year.
- Mismatched PAN and GST data. If declared figures do not reconcile with ITR and GST records, the classification can be challenged.
- Assuming traders are excluded. Retail and wholesale traders have been eligible since July 2021.
- Assuming medium enterprises get the 45-day protection. Sections 15 and 16 cover micro and small enterprises only.
- Registering each branch separately. One registration covers the enterprise; units are added within it.
Key takeaways
- Udyam registration is free, online and gives a permanent 12-digit URN under the MSMED Act, 2006.
- Since 1 April 2025 (S.O. 1364(E)), Micro reaches ₹10 crore turnover and ₹2.5 crore investment.
- Classification is composite and recalculated every year.
- Micro and small suppliers must be paid within 45 days, or 15 without an agreement, with compound interest at three times the RBI bank rate if they are not.
- For the buyer, a late payment is deductible only in the year it is actually paid: section 43B(h) of the 1961 Act for FY 2025-26, and the same rule under the 2025 Act from Tax Year 2026-27.
Need help with Udyam registration?
Most businesses can register on their own. If your investment and turnover data needs reconciling with ITR and GST records first, a CA review avoids classification errors. Regikart files Udyam registration for ₹499 from Kolkata (head office), Delhi and Bengaluru. Call or WhatsApp +91 70444 94804, or contact us.
Frequently asked questions
Is Udyam registration free?
Yes. There is no government fee, and registration is only on udyamregistration.gov.in. Regikart's ₹499 (plus GST) is an optional professional fee for filing it for you.
How long does Udyam registration take?
It is usually instant. Once Aadhaar, PAN and GST details validate, the certificate is generated and emailed within minutes.
Can I register without GST?
Yes, if your business is not required to be registered under GST. Where GST registration is mandatory for your turnover or activity, the GSTIN is required.
Does Udyam registration expire?
No. The URN has lifetime validity, but you must complete the annual update of turnover, investment and ownership details on the portal.
Can I register more than one business under a single Udyam registration?
One registration covers one enterprise and all its activities, including manufacturing and services, and its branches or units. A separate legal entity, such as a second company or LLP, needs its own registration.
What happens if my business grows beyond the MSME limits?
The portal recalculates your category each year from ITR and GST data. Cross a Micro or Small ceiling on either investment or turnover and you move up a category; cross the Medium ceiling and you are no longer an MSME. Medium enterprises lose the 45-day payment protection.
Does the 45-day payment rule apply to medium enterprises?
No. Sections 15 and 16 of the MSMED Act, and the section 43B(h) tax rule, cover micro and small enterprises only.
Does a buyer lose the deduction if it pays an MSME late?
No, the deduction is not lost. For FY 2025-26, section 43B(h) of the Income-tax Act, 1961 allows it in the year of actual payment. From Tax Year 2026-27 the Income-tax Act, 2025 carries the same rule. It is tested invoice by invoice.
What interest can I claim if a buyer pays late?
Compound interest at three times the bank rate notified by the RBI, under section 16 of the MSMED Act. If the buyer does not pay, you can file a reference with the MSE Facilitation Council through the MSME Samadhaan portal.
Do existing MSMEs need to re-register after the 2025 revision?
No. The revised limits apply automatically to existing registrations.
Can a salaried person register a side business under Udyam?
Yes. As long as there is a genuine business activity with its own PAN, a salaried individual can register that enterprise.
Udyam registration kaise karein?
udyamregistration.gov.in par jaakar Aadhaar OTP se verify karein, PAN aur GST details bharein, aur self-declaration submit karein. Certificate turant email par mil jaata hai, aur koi government fee nahi hai.
About the author
Regikart CA Team
Chartered Accountants at Regikart. Want to discuss this in the context of your business?
