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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 delayed-payment protection for micro and small suppliers, CGTMSE guarantees, GeM preference, TReDS access, and priority sector lending.

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SCOPEConfirmed in writing
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 — composite investment + turnover classification, and Udyam Registration replacing UAM/EM Part II from 1 July 2020. Notification S.O. 1364(E) dated 21 March 2025 — revised limits, in force 1 April 2025. Micro: investment ≤₹2.5 Cr AND turnover ≤₹10 Cr; Small: ≤₹25 Cr AND ≤₹100 Cr; Medium: ≤₹125 Cr AND ≤₹500 Cr. MSMED Act, 2006: Section 15 — buyer to pay a micro or small supplier within 15 days of acceptance (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) — a sum payable to a micro or small enterprise beyond the time limit under Section 15 MSMED Act is deductible only in the year of actual payment (inserted by Finance Act 2023, effective AY 2024-25). CGTMSE Scheme — collateral-free credit guarantee for MSEs.

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 (S.O. 2119(E), as amended by S.O. 1364(E) dated 21 March 2025, in force 1 April 2025):

| Category | Investment in Plant & Machinery | Annual Turnover (excluding exports) |
|----------|--------------------------------|-----------------|
| Micro | ≤ ₹2.5 crore | ≤ ₹10 crore |
| Small | ≤ ₹25 crore | ≤ ₹100 crore |
| Medium | ≤ ₹125 crore | ≤ ₹500 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 — delayed-payment protection: buyers who purchase from micro and small suppliers and fail to pay within 15 days of acceptance (or the agreed period, not exceeding 45 days) are liable for compound interest at 3× the RBI bank rate.
(ii) Section 43B(h) Income Tax Act: a sum payable to a micro or small supplier beyond the Section 15 time limit is deductible only in the year of actual payment (effective AY 2024-25 onwards per Finance Act 2023).
(iii) CGTMSE: Credit Guarantee Fund Trust for Micro and Small Enterprises — collateral-free credit guarantee for micro and small enterprises.
(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: Micro and Small Enterprises are exempt from bid security (Earnest Money Deposit) in government procurement (GFR 2017, Rule 170); purchase preference in government procurement.

The CA's role: verify PAN/GSTIN validity, prepare investment computation (linked to the ITR under S.O. 2119(E), excluding land and building, furniture and fittings, and the items in Explanation I to Section 7(1) of the Act), 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 ≤₹2.5 Cr + turnover ≤₹10 Cr), Small (≤₹25 Cr + ≤₹100 Cr), or Medium (≤₹125 Cr + ≤₹500 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 from ITR

    Compute the investment in plant and machinery from the ITR of previous years as per Notification S.O. 2119(E), using depreciated cost as on 31 March of the previous year; a new enterprise with no ITR uses invoice value excluding GST. Include: all tangible assets. Exclude: land and building, furniture and fittings, and pollution control, research and development and industrial safety devices. 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 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 (no renewal required; the enterprise must keep its ITR and GST details updated on the portal, or risk suspension). Advise on benefits to activate: notify buyer clients of payment rights under Section 15 MSMED Act (15 days from acceptance, or the agreed period up to 45 days); register on GeM portal; apply for CGTMSE guarantee; register on TReDS (Receivables Exchange of India/RXIL/M1xchange/InvoiceMart). Advise buyers of the Section 43B(h) disallowance risk if they pay micro or small suppliers beyond the Section 15 time limit.

    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 delayed-payment protection; (ii) give buyers proof of micro or small status for Section 43B(h) of the Income Tax Act; (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. There is no renewal requirement. However, the enterprise must update its information on the Udyam portal, including ITR and GST return details for the previous financial year; failing to do so within the period the portal specifies makes it liable for suspension of its status. The classification is updated from that information and government sources. On an upward change the enterprise continues to avail of all non-tax benefits of its earlier category for three years from the date of the change; on a downward change it takes the lower category from 1 April of the following financial year.
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 sum payable to a micro or small enterprise beyond the time limit in Section 15 of the MSMED Act — 15 days from acceptance, or the agreed period, not exceeding 45 days — is 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?
The two terms mean the same thing. Under S.O. 2119(E), 'plant and machinery or equipment' has the meaning of plant and machinery in the Income Tax Rules, 1962 and includes all tangible assets other than land and building, furniture and fittings. The figure is linked to the ITR of previous years, and the Udyam form uses depreciated cost as on 31 March of the previous year. A new enterprise with no ITR uses purchase (invoice) value excluding GST, on self-disclosure. The cost of pollution control, research and development and industrial safety devices is excluded.

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