MSME Classification under the Udyam Framework
Since 1 July 2020 an enterprise is classified as Micro, Small or Medium using a composite test: investment in plant and machinery or equipment and annual turnover. From 1 April 2025 the Government raised the investment limits 2.5 times and the turnover limits 2 times, moving thousands of businesses into a lower category and restoring their access to MSME benefits. This checker applies both criteria, explains which band each figure falls in and shows how the result changes under the older limits.
Current limits (from 1 April 2025)
- Micro – investment up to ₹2.5 crore and turnover up to ₹10 crore.
- Small – investment up to ₹25 crore and turnover up to ₹100 crore.
- Medium – investment up to ₹125 crore and turnover up to ₹500 crore.
Earlier (July 2020 to March 2025) the limits were ₹1 crore / ₹5 crore for Micro, ₹10 crore / ₹50 crore for Small and ₹50 crore / ₹250 crore for Medium. Manufacturing and service enterprises share the same limits.
How the composite test works
An enterprise must satisfy both ceilings to stay in a category; crossing either one pushes it to the next higher category. Example: investment ₹1.8 crore (Micro band) and turnover ₹12 crore (Small band, since it exceeds ₹10 crore) – the enterprise is Small. Take another unit with investment ₹2 crore and turnover ₹8 crore: today it is Micro on both counts, but under the old limits it was Small (investment above ₹1 crore and turnover above ₹5 crore). The tool does this cross-check for you and reports whether the April 2025 change moved you down a category.
What counts as investment and turnover
Investment is the written-down value of plant and machinery or equipment as per the previous year's income-tax return; land, building, furniture, fittings, pollution-control and R&D equipment and GST are excluded, and second-hand machinery is taken at purchase price. Turnover excludes exports, and all units under the same PAN are clubbed. Upward reclassification is immediate when a limit is crossed; downward reclassification takes effect only after the enterprise stays within both lower limits for a full financial year.
Why it matters
Udyam status unlocks priority-sector lending, collateral-free CGTMSE loans, the 45-day payment protection under section 15 of the MSMED Act (and the buyer's section 43B(h) disallowance), tender exemptions, and interest subvention schemes. Registration at udyamregistration.gov.in is free and needs only Aadhaar and PAN.
Frequently Asked Questions
What are the MSME limits from 1 April 2025?
Micro: investment up to ₹2.5 crore and turnover up to ₹10 crore. Small: ₹25 crore and ₹100 crore. Medium: ₹125 crore and ₹500 crore.
Are both investment and turnover limits required?
Yes. It is a composite test – an enterprise is placed in the higher of the two categories indicated by its investment and its turnover.
Is export turnover counted?
No. Exports of goods or services are excluded from turnover for classification purposes.
Do service businesses have different limits?
No. Since July 2020 manufacturing and service enterprises use the same investment and turnover limits.
When does a downgrade to a lower category take effect?
Only after the enterprise remains below both limits of the lower category for a full financial year; an upgrade applies as soon as either limit is crossed.
Disclaimer: This tool is for general information and estimation only. Tax rates and rules change — verify with official sources or a professional before acting. Read full disclaimer.