How is a micro, small, or medium enterprise classified?
From 1 April 2025, a micro enterprise is one whose investment in plant and machinery or equipment does not exceed ₹2.5 crore and whose turnover does not exceed ₹10 crore. A small enterprise stays within ₹25 crore of investment and ₹100 crore of turnover. A medium enterprise stays within ₹125 crore of investment and ₹500 crore of turnover. Crossing either ceiling moves the enterprise up.
What are the two ceilings?
| Class | Investment | 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 figures apply, and they apply whether the enterprise manufactures or provides services. An enterprise that stays inside both ceilings of a class keeps that class. The certificate is Udyam. How it is obtained, and that the portal charges no fee, is on the Udyam page.
Which older limits no longer decide?
A classification that used only investment, and that used a lower investment cap for services than for manufacturing, does not decide an enterprise now. The limits of ₹1 crore, ₹10 crore, and ₹50 crore of investment, with separate service bands, are not the test from 1 April 2025. A note written before that date can still show those figures. They are not applied to a new classification.
What does the class not change?
The certificate does not change the income-tax rate. It does not, by itself, give a collateral-free loan, a subsidy, or an exemption from electricity duty. A scheme that uses the certificate says so in that scheme. Registration is voluntary. A company that buys from a registered micro or small supplier, and that still owes the supplier for more than 45 days, reports that delay in Form MSME-1. A medium supplier is outside that form.
Frequently asked questions
Four questions cover the two ceilings, services, tax, and whether registration is compulsory.
Does one ceiling decide the class?
No. Investment and turnover are both tested. Crossing either ceiling moves the enterprise into the next class.
Are services classified on a lower investment figure?
No. The same investment and turnover ceilings apply to manufacturing and to services. The older split, with a lower investment cap for services, does not decide a classification now.
Does the class cut income tax?
No. The certificate does not change the income-tax rate. It also does not by itself give a collateral-free loan or an electricity exemption.
Is Udyam compulsory?
Registration is voluntary. The half-yearly company return about delayed payments looks at suppliers that are registered as micro or small.
Sources
The ceilings in force from 1 April 2025 were notified by S.O. 1364(E) dated 21 March 2025. Registration is Udyam, under the MSMED Act, 2006.