MSME classification changed from 1 April 2025, raising the composite investment-and-turnover ceilings for micro, small and medium enterprises. Both tests matter because an enterprise is classified using the combined criteria; a business cannot choose the more favourable turnover band while ignoring investment.
At a glance
Use the post-1-April-2025 threshold table.
Using the old pre-April-2025 ₹1/10/50 crore investment limits.
Current Udyam certificate and portal profile
Rules
| Control |
|---|
| MSME classification thresholds were revised from 1 April 2025, making correct Udyam classification a current compliance issue. |
| Investment and turnover tests must be applied together using the notified framework. |
| PAN/GST-linked enterprise data should be reconciled where classification is disputed. |
| Classification affects access to MSME protections and should be refreshed after growth or restructuring. |
The revised micro ceiling is investment up to ₹2.5 crore and turnover up to ₹10 crore under the notified framework effective 1 April 2025.
The revised small ceiling is investment up to ₹25 crore and turnover up to ₹100 crore.
The revised medium ceiling is investment up to ₹125 crore and turnover up to ₹500 crore.
Classification is composite: crossing the ceiling in either investment or turnover can push the enterprise into the next category.
Exports are excluded from turnover for classification in the manner provided by the MSME framework, making GST/PAN-linked data quality important.
Plant and machinery/equipment investment is determined using the prescribed income-tax-linked methodology rather than an arbitrary balance-sheet revaluation.
Enterprises under common PAN/GST-linked structures should check aggregation rules and Udyam data rather than registering fragments to stay in a lower category.
Both investment and turnover limits must be respected after 1 April 2025
The official Udyam portal now shows the post-1-April-2025 thresholds: micro up to ₹2.5 crore investment and ₹10 crore turnover; small up to ₹25 crore investment and ₹100 crore turnover; medium up to ₹125 crore investment and ₹500 crore turnover. The enterprise must satisfy both limbs for a category. Crossing either ceiling can move the enterprise out of that category even if the other number remains below its limit.
Investment is not simply the gross amount spent on every asset. Udyam classification follows the notified method based on plant and machinery or equipment and links the figure to income-tax records, with specified exclusions. Turnover is similarly integrated with GST/income-tax data and exports are excluded for classification purposes under the framework. A self-made spreadsheet that ignores the notified computation can misclassify the enterprise.
Classification affects more than the Udyam certificate. Delayed-payment protection, priority lending, tender benefits and scheme eligibility can depend on whether the enterprise is micro/small/medium and on the status relevant to the particular law or scheme. A business that grows across a threshold should therefore update its compliance map rather than viewing reclassification as a purely administrative portal event.
Group and common-control structures require care because the Udyam framework aggregates prescribed information using PAN/GST-linked records. Splitting operations across entities solely to preserve a lower category can create inconsistency with the underlying ownership and tax data.
| Situation | How to handle it |
|---|---|
| Investment ₹2 crore, turnover ₹12 crore | Not micro because the turnover ceiling of ₹10 crore is crossed; test the small-enterprise limits. |
| Investment ₹20 crore, turnover ₹95 crore | Falls within the small-enterprise ceilings, subject to the notified computation method. |
| Investment ₹120 crore, turnover ₹520 crore | Turnover exceeds the medium ceiling; the enterprise is outside MSME classification for that test. |
Worked example 1
A manufacturer has ₹18 crore of qualifying investment and ₹108 crore turnover. Investment is within the small-enterprise ceiling, but turnover exceeds ₹100 crore. Because both criteria must be satisfied to remain small, the enterprise cannot call itself “small” merely by pointing to investment. It should test the medium-enterprise criteria, update Udyam data as required and then assess downstream effects on delayed-payment protection, procurement and disclosures.
Worked example 2
A manufacturer had ₹18 crore qualifying investment and ₹92 crore turnover in 2025-26. It remains small under the new limits. The next year turnover rises to ₹108 crore while investment stays ₹20 crore. Because both tests must be met, it can no longer remain small and should review medium classification and every scheme/contract that depends on MSME status. The business should use portal-linked tax/GST data rather than a management-sales figure alone.
Mistakes
- Using the old pre-April-2025 ₹1/10/50 crore investment limits.
- Testing only turnover or only investment instead of both.
- Including/excluding assets or exports without following the notified computation method.
- Assuming Udyam classification automatically decides eligibility for every MSME scheme without checking that scheme’s conditions.
Action steps
- Use the post-1-April-2025 threshold table.
- Compute qualifying investment under the notified method.
- Reconcile turnover to linked tax/GST records and export exclusions.
- Test both limits for the target category.
- Review benefits/contracts when category changes.
- Update portal information and internal compliance records.
Documents
- Current Udyam certificate and portal profile
- Income-tax depreciation/plant-and-machinery working
- GST/turnover reconciliation including export treatment
- Board/finance memo showing threshold monitoring for the year
FAQs
What are the current micro-enterprise limits?
From 1 April 2025, micro means investment not exceeding ₹2.5 crore and turnover not exceeding ₹10 crore.
Can a business be micro if turnover is ₹12 crore but investment is only ₹1 crore?
No. Both ceilings must be satisfied for the category.
Are exports counted in turnover for Udyam classification?
The Udyam framework excludes export turnover for classification, subject to the notified data/computation rules.
Does reclassification affect delayed-payment rights?
It can. The status relevant to the supply and the particular MSMED provision should be checked when category changes.
Sources
- Official Udyam Registration Portal — current classification
- Udyam — Important to Know
- Udyam Registration — current MSME classification
Educational reference. Verify current official sources and facts.