MSME Classification from 1 April 2025 — New Udyam Limits, Reclassification Rules and the Payment Protections They Unlock
Quick answer: From 1 April 2025, under Ministry of MSME Notification S.O. 1364(E) of 21 March 2025, a micro enterprise is one with investment in plant and machinery or equipment up to ₹2.5 crore and turnover up to ₹10 crore; small is up to ₹25 crore and ₹100 crore; medium up to ₹125 crore and ₹500 crore — both tests together, read from ITR and GST data linked to the Udyam portal. A unit moves up as soon as it crosses either ceiling and moves down only after staying below both for a full financial year; an upgraded unit keeps its old benefits for a year. Informal micro units get an Udyam Assist certificate treated at par with Udyam. Being micro or small also triggers the 15/45-day payment rule and compound interest at three times the bank rate on delayed payments. We register, reclassify and chase delayed payments.
Last verified 4 October 2026 — rules on this page checked against the current notifications. We update it the day a rule changes.
The limits (S.O. 1364(E), effective 1 April 2025)
| Category | Investment in plant & machinery / equipment | Annual turnover | Previous (2020) |
|---|---|---|---|
| Micro | ≤ ₹2.5 crore | ≤ ₹10 crore | ₹1 cr / ₹5 cr |
| Small | ≤ ₹25 crore | ≤ ₹100 crore | ₹10 cr / ₹50 cr |
| Medium | ≤ ₹125 crore | ≤ ₹500 crore | ₹50 cr / ₹250 cr |
- Composite test: a unit must satisfy both ceilings of a category; crossing either one moves it up
- Data source: investment from the ITR (written-down value of plant and machinery, excluding land, building, furniture and pollution-control/R&D equipment) and turnover from GST returns — export turnover is excluded; self-declared figures are overwritten by the linked data
- Reclassification: upward on crossing a limit, with the previous category's benefits retained for one year from the end of that financial year; downward only after remaining below both limits for a full financial year
- Udyam Assist Platform: informal micro enterprises without GST/ITR get an Udyam Assist certificate, treated at par with Udyam for priority-sector lending and schemes
What the category changes
| Benefit / duty | Micro & small | Medium |
|---|---|---|
| 15/45-day payment rule (MSMED Act s.15) and MSME Samadhaan interest at 3× bank rate, compounded monthly (s.16) | Yes | No |
| Buyer's income-tax disallowance of sums unpaid within the s.15 period (ex-s.43B(h); successor section under the Income-tax Act 2025 confirmed at filing) | Yes | No |
| Companies' half-yearly MSME Form I (dues outstanding beyond 45 days) | Yes | No |
| Public procurement preference (25% earmark, L1+15%, EMD exemption) — NSIC, GFR | Yes | No |
| CGTMSE collateral-free guarantee (cover enhanced in Budget 2025-26) | Yes | No |
| Priority-sector lending classification (RBI PSL Directions 2025, from the Udyam certificate) | Yes | Yes |
| TReDS onboarding mandatory for buyers with turnover above ₹250 crore | Beneficiary | Beneficiary / buyer |
| State industrial policy incentives (Bihar, UP, Haryana) and PMFME / PMEGP, ZED | Yes | Mostly |
What we do
- Udyam registration and updates (NIC codes, units, bank), Udyam Assist for informal units, reclassification checks against ITR/GST figures
- Delayed-payment recovery through MSME Samadhaan and conciliation; MSME Form I and buyer-side compliance for companies
- Benefit stacking: CGTMSE, PMEGP, ZED, state subsidies, GeM/NSIC — see MSME schemes
Figures are quoted from the issuing authority's own notification or portal; anything not yet confirmed on an official page is marked and checked at filing, never estimated.
Talk to us before you file anything
Frequently asked questions
What is the new MSME definition from April 2025?
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 — Notification S.O. 1364(E) of 21 March 2025, effective 1 April 2025.
Is the test investment or turnover?
Both — a composite criterion; crossing either ceiling moves the enterprise to the next category.
How does Udyam know my turnover and investment?
From ITR and GST data linked to the portal; export turnover is excluded from the turnover test.
If I cross a limit, do I lose benefits immediately?
You move up, but keep the previous category's benefits for one year from the end of that financial year; moving down requires staying below both limits for a full year.
What is Udyam Assist?
A platform for informal micro enterprises without GST/ITR; the certificate is treated at par with Udyam registration for lending and schemes.
Does the 45-day payment rule apply to medium enterprises?
No — the MSMED Act's 15/45-day rule, Samadhaan interest and the related tax disallowance apply to micro and small suppliers only.
What interest is payable on delayed MSME payments?
Compound interest, with monthly rests, at three times the RBI bank rate under Section 16 of the MSMED Act.
Did the old limits apply to existing Udyam certificates?
Existing registrations are reclassified under the new limits from 1 April 2025 on the linked data; check the certificate shows the current category.