MSME Classification: Micro, Small and Medium Enterprise Limits

India classifies a business as micro, small or medium using two tests: investment in plant and machinery or equipment, and annual turnover. Under the limits effective from 1 April 2025, a micro enterprise has investment up to Rs 2.5 crore and turnover up to Rs 10 crore. Small and medium limits are higher.

The current limits

• Micro: investment up to Rs 2.5 crore and turnover up to Rs 10 crore.
• Small: investment up to Rs 25 crore and turnover up to Rs 100 crore.
• Medium: investment up to Rs 125 crore and turnover up to Rs 500 crore.

Both conditions must be met for a category. These figures came from the Government’s revision announced in Budget 2025-26. Always confirm against the latest notification on msme.gov.in before relying on them.

Why it matters for your business

MSME status can open access to schemes, priority-sector style lending and certain payment protections. To be recognised, you apply for Udyam registration, which is online and uses PAN-linked and GST-linked data for turnover details. Taxes follow different rules, so check your GST registration position separately.

Who can register

• Proprietorships, partnerships, LLPs and companies, in manufacturing or services.
• A newly set-up firm, which can register on its own declaration and update later.
• A company formed through private limited company registration, once it has its PAN.

You will typically need your PAN and Aadhaar details for the proprietor, partner or authorised signatory. See our guides on the PAN card and Aadhaar card.

Common mistakes

• Using the old limits from before 2025 for planning.
• Counting only one test, investment or turnover, instead of both.
• Not updating Udyam details after the business grows or changes activity.
• Registering one entity under different PANs without checking the rules.

Related guides: What is a PAN Card, What is an Aadhaar Card, Registered Office of a Company

FAQs

Is Udyam registration free?

Yes. The official Udyam portal does not charge a fee for registration.

Does exceeding the limit cancel my registration?

Your category changes to match your new figures. Update your Udyam details so the record stays correct.

Are services and manufacturing treated differently?

The investment and turnover limits are now the same for both. What differs is the nature of the activity you declare.

Wondering which category you fall in? You can talk to a Taxhint expert.