University · Calculators

MSME Udyam Classification Calculator.

Micro, Small or Medium under the Udyam composite criteria — revised 1 April 2025 to ₹2.5/25/125 crore investment and ₹10/100/500 crore turnover — with the upward-only reclassification rule explained.

Inputs

Investment in plant & machinery / equipment (₹ crore)

Excludes land, buildings, furniture and fittings. Linked to the previous year’s ITR (self-declared for a new enterprise with no prior return).

Annual turnover (₹ crore)

Excludes export turnover. Linked to GST returns via PAN + GSTIN.

Result

Udyam categorySmall

Investment ceiling for this category₹25 Cr

Turnover ceiling for this category₹100 Cr

Why

Both investment ₹15 Cr ≤ ₹25 Cr and turnover ₹60 Cr ≤ ₹100 Cr — the composite test requires BOTH to qualify for Small. Breaching either limb alone would push the enterprise to the next category up.

Udyam classification is not the Sec 43B(h) test.

This is the general MSME classification under the MSMED Act — it decides who can register on Udyam and what category they fall in. The Sec 43B(h) payment-disallowance rule for buyers of goods/services from Micro and Small suppliers is a separate, narrower test: Medium enterprises are outside its scope entirely, and it applies only when the supplier is Udyam-registered.

Sec 43B(h) disallowance checker MSME 43B(h) audit approach

How Udyam (MSME) classification works

The MSME Development Act 2006, as revised by government notification effective 1 April 2025, classifies every enterprise — manufacturing or services, no distinction since the 1 July 2020 unification — using a composite test of two figures: investment in plant and machinery/equipment, and annual turnover. Micro: investment up to ₹2.5 crore AND turnover up to ₹10 crore. Small: up to ₹25 crore AND ₹100 crore. Medium: up to ₹125 crore AND ₹500 crore. Beyond the Medium ceiling, the enterprise is not an MSME.

Both limbs must be satisfied to hold a category — if EITHER investment or turnover crosses the ceiling for the current category, the enterprise moves to the next higher category. It only moves back DOWN to a lower category when BOTH investment and turnover fall below that lower category’s ceilings — a single figure improving is not enough on its own.

Investment in plant and machinery/equipment excludes land, buildings, furniture and fittings, and is computed from the enterprise’s own previous-year Income Tax Return (self-declared for a new enterprise with no prior ITR, until the 31 March following its first filed return). Turnover excludes export turnover and is verified against GST returns. Registration is on the Udyam portal — a real-time, self-declared PAN+GSTIN-linked process cross-checked against Income Tax and GST data, with no documents to upload.

Worked example — turnover growth pushing a Small enterprise to Medium

A components manufacturer has ₹18 crore invested in plant and machinery and reports turnover of ₹95 crore in FY 2025-26 (Small: within ₹25 Cr / ₹100 Cr). In FY 2026-27, a large export order takes turnover to ₹140 crore, while plant investment stays at ₹18 crore.

Inputs

Investment (unchanged)₹18 Cr — within Small (≤ ₹25 Cr) and Medium (≤ ₹125 Cr)

FY 2025-26 turnover₹95 Cr — within Small ceiling (≤ ₹100 Cr)

FY 2026-27 turnover₹140 Cr — exceeds Small ceiling (₹100 Cr), within Medium (≤ ₹500 Cr)

Output

FY 2025-26 categorySmall

FY 2026-27 categoryMedium — turnover alone crossing the ceiling is enough

Investment ceiling irrelevant hereNever breached — only turnover drove the move

Only turnover exceeded its ceiling; investment stayed well inside both the Small and Medium limits. Because the composite rule escalates on EITHER limb breaching, that alone is enough to push the enterprise to Medium — investment does not need to move at all. Reverting to Small the following year would additionally require turnover to fall back under ₹100 crore, since a downgrade needs BOTH figures below the lower ceiling.

Common mistakes

Using the pre-2025 or pre-2020 threshold tables

Limits have been revised twice: 1 July 2020 (unified manufacturing/services, first Udyam limits) and 1 April 2025 (investment raised 2.5x, turnover raised 2x). A lot of circulating material — and some older engagement templates — still cites the ₹1/10/50 crore investment or ₹5/50/250 crore turnover figures that predate the 2025 revision.

Treating a downgrade as symmetric with an upgrade

Upgrade needs only ONE limb to breach its ceiling. Downgrade needs BOTH investment and turnover to fall below the lower category’s ceilings. An enterprise whose turnover drops but whose investment stays elevated does not revert automatically.

Including land, buildings, furniture in the investment figure

Only plant, machinery and equipment count. Land, buildings, furniture and fittings are excluded by definition — including them overstates investment and can misclassify an enterprise upward.

Including export turnover

Export turnover is excluded from the turnover test entirely, whatever its size — an export-heavy enterprise can have domestic turnover well under its ceiling while its total revenue looks much larger.

Conflating Udyam classification with the Sec 43B(h) disallowance test

Sec 43B(h) tests only whether a SUPPLIER is Udyam-registered as Micro or Small — Medium suppliers are outside that provision entirely, and the classification test itself is unrelated to whether a specific invoice was paid within 15/45 days.

Frequently asked questions

What are the current MSME classification limits?+

Effective 1 April 2025: Micro — investment up to ₹2.5 crore AND turnover up to ₹10 crore. Small — up to ₹25 crore AND ₹100 crore. Medium — up to ₹125 crore AND ₹500 crore. Beyond that, the enterprise is not classified as an MSME.

Is there a separate classification for manufacturing vs services?+

No — the distinction was removed with effect from 1 July 2020. A single composite investment-and-turnover test now applies to both manufacturing and service enterprises.

What counts as "investment" for MSME classification?+

Investment in plant, machinery or equipment — tangible assets used in the business, excluding land, buildings, furniture and fittings. It is computed from the enterprise’s own previous-year Income Tax Return; a new enterprise with no prior ITR self-declares until the 31 March following its first filed return.

Does export turnover count toward the MSME turnover limit?+

No — export turnover of goods or services is excluded entirely when computing turnover for MSME classification purposes.

Can an enterprise move back to a lower MSME category?+

Only if BOTH investment and turnover fall below the lower category’s ceilings. Crossing the current category’s ceiling on either limb alone is enough to move UP; moving back DOWN requires both figures to improve.

How is Udyam classification different from the Sec 43B(h) MSME payment rule?+

Udyam classification (this calculator) determines an enterprise’s general MSME status. Sec 43B(h) of the Income-tax Act is a narrower, separate rule disallowing a buyer’s expenditure deduction for late payment to a Micro or Small (never Medium) Udyam-registered supplier beyond the 15/45-day MSMED window — see the dedicated 43B(h) checker.

Authoritative sources

MSME Development Act 2006 + Gazette Notification (revised classification effective 1 April 2025) — Investment and turnover figures reflect the Budget 2025 revision (2.5x investment, 2x turnover vs the 1 July 2020 limits). Verify the current notification for borderline cases.

Always confirm against the latest version of the source. Regulations evolve and amendments are common.

Related calculators

Sec 43B(h) Disallowance Checker →MSME 43B(h) Audit Approach →Net Worth Calculator →Ind AS Applicability Calculator →

Share this tool

Last reviewed: 2026-07-18 · For informational purposes only — not professional advice.