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Business Compliance & Labour Lawvia Udyam Registration Portal (udyamregistration.gov.in)

Udyam Registration — MSME Certificate (Micro, Small & Medium Enterprises)

Online registration on the Udyam Registration Portal to obtain the Udyam Registration Number (URN) and Udyam Certificate — classifying your enterprise as Micro, Small, or Medium under the MSMED Act, 2006. Unlocks 45-day payment protection, CGTMSE guarantees, GeM preference, TReDS access, and priority sector lending.

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STARTING FROM₹3,999
TYPICAL TIMELINE2 days
DOCS REQUIRED3 documents
APPLICABLE TOCompany, LLP, Individual

Regulatory Framework

MSMED Act, 2006: Sections 7, 8 — classification of micro, small and medium enterprises. Ministry of MSME Notification S.O. 2119(E) dated 26 June 2020 — Udyam Registration replacing UAM/EM Part II from 1 July 2020. Notification S.O. 1702(E) dated 1 June 2020 — revised MSME classification criteria (composite investment + turnover). Micro: investment ≤₹1 Cr AND turnover ≤₹5 Cr; Small: ≤₹10 Cr AND ≤₹50 Cr; Medium: ≤₹50 Cr AND ≤₹250 Cr. MSMED Act, 2006: Section 15 — buyer to pay MSME supplier within 45 days (or agreed period not exceeding 45 days); Section 16 — compound interest at 3× RBI bank rate on overdue amounts. Income Tax Act, 1961: Section 43B(h) — deduction for payment to MSME allowed only if paid within time limit under Section 15 MSMED Act (inserted by Finance Act 2023, effective AY 2024-25). CGTMSE Scheme — collateral-free credit guarantee for MSEs up to ₹5 crore.

Overview

Udyam Registration is the official government registration under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 for businesses that qualify as Micro, Small, or Medium Enterprises. It replaced the earlier Entrepreneur Memorandum (EM Part II) and Udyog Aadhaar Memorandum (UAM) from 1 July 2020 vide notification S.O. 2119(E) dated 26 June 2020 issued by the Ministry of MSME.

Classification under Udyam (as amended by S.O. 1702(E) dated 1 June 2020):

| Category | Investment in Plant & Machinery | Annual Turnover |
|----------|--------------------------------|-----------------|
| Micro | ≤ ₹1 crore | ≤ ₹5 crore |
| Small | ≤ ₹10 crore | ≤ ₹50 crore |
| Medium | ≤ ₹50 crore | ≤ ₹250 crore |

A critical feature: Udyam classification is now based on ITR data (investment figure) and GSTN turnover data — the portal is integrated with the Income Tax Department and GST Network for automatic data pull. The enterprise must provide its PAN and GSTIN (mandatory for GST-registered entities); the investment and turnover figures are auto-populated from tax databases.

Key benefits of Udyam Registration:
(i) Section 15/16 MSMED Act — 45-day payment protection: buyers who purchase from MSME suppliers and fail to pay within 45 days (or agreed period, not exceeding 45 days) are liable for compound interest at 3× the RBI bank rate.
(ii) Section 43B(h) Income Tax Act: buyers' deduction for payments to MSME suppliers disallowed unless actually paid within 45 days (effective AY 2024-25 onwards per Finance Act 2023).
(iii) CGTMSE: Credit Guarantee Fund Trust for Micro and Small Enterprises — collateral-free loans up to ₹5 crore.
(iv) GeM Portal: Government e-Marketplace gives MSMEs preference in government procurement.
(v) TReDS: Trade Receivables Discounting System — invoice discounting at competitive rates.
(vi) Priority Sector Lending: banks' directed lending requirements include MSME — better access to credit.
(vii) MSME Samadhaan: government portal for MSME delayed payment redressal.
(viii) Tender preference: MSMEs exempted from Earnest Money Deposit in government tenders (below ₹25 lakh); purchase preference in government procurement.

The CA's role: verify PAN/GSTIN validity, prepare investment computation (plant and machinery at original cost, excluding land and buildings and items specified in Notification S.O. 1702(E)), verify turnover from ITR, complete Udyam Registration portal application, and advise on classification optimisation.

How It Works

  1. 1

    Eligibility & Classification Assessment — Investment & Turnover

    Determine the enterprise's classification: Micro (investment ≤₹1 Cr + turnover ≤₹5 Cr), Small (≤₹10 Cr + ≤₹50 Cr), or Medium (≤₹50 Cr + ≤₹250 Cr). The composite criteria — both investment AND turnover must be within limits — means an enterprise exceeding either limit moves to the next category. Verify if the enterprise is service-only or manufacturing — both use the same investment/turnover matrix (unified post the 2020 amendment).

    Government0.5 days
  2. 2

    PAN & GSTIN Verification

    Verify the applicant's PAN (mandatory for all entities) and GSTIN (mandatory for GST-registered enterprises). The Udyam portal is integrated with GSTN — incorrect GSTIN leads to mismatched auto-populated turnover. Confirm that the GSTIN reflects the correct legal entity. For entities below GST registration threshold (₹20 lakh), GSTIN is not mandatory but PAN is.

    Government0.5 days
  3. 3

    Investment Computation — Plant & Machinery at Original Cost

    Compute the investment in plant and machinery at original cost (not written-down value or market value) as per Notification S.O. 1702(E). Include: all plant and machinery purchased or acquired for production. Exclude: land, building, furniture, consumables, items listed in Schedule II of the Factories Act 1948 (not applicable to non-manufacturing). For service enterprises, the term is 'equipment' instead of 'plant and machinery'.

    Government0.5 days
  4. 4

    Udyam Portal Registration & URN Generation

    Complete the Udyam Registration application at udyamregistration.gov.in using Aadhaar of the proprietor/managing partner/authorised signatory. For companies and LLPs, PAN and GSTIN are primary identifiers. Submit the application and receive the 14-digit Udyam Registration Number (URN) — format: UDYAM-XX-00-0000000. Udyam Certificate is self-generated on the portal immediately after registration.

    Government0.5 days
  5. 5

    Udyam Certificate & Benefits Advisory

    Download and preserve the Udyam Certificate (permanent, no renewal required — automatic update based on ITR data). Advise on benefits to activate: notify buyer clients of 45-day payment rights under Section 15 MSMED Act; register on GeM portal; apply for CGTMSE guarantee; register on TReDS (Receivables Exchange of India/RXIL/M1xchange/InvoiceMart). Advise suppliers of the Section 43B(h) disallowance risk if they fail to pay MSME suppliers within 45 days.

    Government0.5 days

Frequently Asked Questions

Is Udyam Registration mandatory?
Udyam Registration is not universally mandatory for all enterprises, but it is mandatory to access MSME benefits. Without a Udyam Registration Number (URN), an enterprise cannot: (i) invoke Section 15/16 of the MSMED Act for 45-day payment protection; (ii) be classified as an MSME supplier under Section 43B(h) of the Income Tax Act (which means buyers face disallowance risk); (iii) avail CGTMSE collateral-free credit guarantees; (iv) get GeM vendor preference; (v) access TReDS platforms at preferential rates. Given the Section 43B(h) implications for buyers, many large companies now require their MSME suppliers to have valid Udyam Registration before onboarding them.
Does Udyam Registration need renewal?
No. Udyam Registration is permanent — there is no renewal requirement and no expiry. However, the classification (Micro/Small/Medium) is automatically updated based on the enterprise's ITR and GSTN data, which are pulled by the Udyam portal annually. If the enterprise's turnover or investment crosses a threshold, the classification upgrades automatically — and the enterprise should check whether it still qualifies as MSME or has graduated out of the MSME category.
Can a company (Pvt Ltd) or LLP register under Udyam?
Yes. All legal entity types can register under Udyam — sole proprietorships, partnerships, Hindu Undivided Families (HUFs), one-person companies, limited liability partnerships (LLPs), and private limited/public limited companies. For companies and LLPs, Udyam Registration uses the PAN of the entity and its GSTIN. The Aadhaar of the authorised signatory (Director/Designated Partner) is used for OTP verification. Each PAN can have only one Udyam registration (covering all activities of the enterprise).
What is Section 43B(h) and how does it affect buyers of MSME goods and services?
Section 43B(h) of the Income Tax Act, 1961 (inserted by Finance Act 2023, effective from AY 2024-25) provides that a buyer's deduction for payments to MSME suppliers (registered under Section 8 of the MSMED Act) is allowed only if the payment is actually made within the time limit specified under Section 15 of the MSMED Act — i.e., within 45 days (or the agreed period, not exceeding 45 days). If the payment is not made within 45 days, the amount is added back to the buyer's taxable income in the year of provision and becomes deductible only in the year of actual payment. This creates a significant tax risk for large buyers who delay payments to MSME suppliers.
What is the difference between investment in plant and machinery vs. equipment for service enterprises?
For manufacturing enterprises, the investment criterion uses 'investment in plant and machinery' at original cost (purchase price, not depreciated value). For service enterprises, the term is 'investment in equipment.' Original cost means the cost at which the asset was purchased, before any depreciation, and excludes: land, building, furniture and fittings, vehicles, and items specified in the Exclusion List in Notification S.O. 1702(E) (such as consumables, pollution control equipment, research and development equipment). This distinction matters because the original cost of assets may be significantly higher than the written-down value in the books — the Udyam classification may differ from what the enterprise expects based on balance sheet values.

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