Key takeaways
- From April 2025, a business is micro up to ₹2.5 crore investment and ₹10 crore turnover, small up to ₹25 crore / ₹100 crore, and medium up to ₹125 crore / ₹500 crore.
- Buyers must pay registered micro and small suppliers within 45 days, or owe interest at three times the RBI bank rate.
- Unpaid dues to micro and small suppliers beyond the time limit aren't deductible for the buyer until paid — a strong lever when chasing payments.
- Registration is free, online and Aadhaar-based. Beware of websites charging for it.
Who counts as an MSME (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 |
Both conditions must be met; exports are excluded from turnover. The limits were more than doubled in 2025, so many businesses that were "medium" — or outside MSME altogether — now qualify as micro or small and get the stronger protections below.
The benefits most businesses miss
1. A legal right to be paid within 45 days
Under the MSMED Act, a buyer must pay a registered micro or small supplier within the agreed period, which can't exceed 45 days from acceptance of goods or services (15 days if nothing is agreed). Beyond that, the buyer owes compound interest at three times the RBI bank rate, which isn't deductible for them.
2. Your customer loses a tax deduction if they pay you late
Payments due to micro and small enterprises that remain unpaid beyond the MSMED Act time limit are not allowed as a deduction to the buyer in that year — only in the year they are actually paid. Larger customers know this, and it makes them pay registered MSMEs on time. Put your Udyam number on every invoice so they can't say they didn't know.
3. MSME Samadhaan for delayed payments
Micro and small suppliers can file a delayed-payment claim online with the MSE Facilitation Council, which conciliates and, if needed, arbitrates. An award against the buyer can only be challenged after depositing 75% of the amount.
4. Easier, cheaper credit
MSME loans count as priority-sector lending for banks. Collateral-free loans are available under the CGTMSE credit-guarantee scheme, and several banks offer concessional rates and faster processing to Udyam-registered units.
5. Lower government fees
MSMEs pay reduced official fees for trademark applications and get a rebate on patent filing fees — useful if you're protecting a brand or product.
6. Government tenders
Central government buyers must source a share of their purchases from micro and small enterprises, and registered MSEs are commonly exempted from paying earnest money deposits and tender fees.
How to register
- Go to the official Udyam Registration portal (udyamregistration.gov.in). Registration is free.
- Authenticate with the Aadhaar of the proprietor, managing partner or authorised director.
- Enter the PAN of the business. Investment and turnover figures are pulled from income-tax and GST records.
- Select your activity (NIC codes) and submit. The Udyam certificate is issued online.
Traders can register too: retail and wholesale traders are recognised for priority-sector lending. Keep the registration updated each year — it reclassifies automatically from your tax data, and a business that grows past a limit moves category.
If you buy from MSMEs, the same rules work in reverse: track supplier status, pay within 45 days, and file the half-yearly MSME-1 return if payments are overdue. See our ROC compliance checklist.