Udyam registration puts your business on record as a micro, small or medium enterprise (MSME). It is done online and has no fee. For micro and small suppliers it also brings a legal right to be paid within 45 days, and gives their buyers a tax reason to pay on time.
Who counts as micro, small or medium
These limits apply from 1 April 2025. A business must be within both limits for its category.
| Category | Investment in plant and machinery | 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 |
How registration works
- Online, self-declared. Register at udyamregistration.gov.in. No documents are uploaded, and there is no fee.
- Whose Aadhaar. The proprietor’s for a proprietorship, the managing partner’s for a firm and the karta’s for an HUF. Companies, LLPs, societies and trusts give their PAN and GSTIN with the authorised signatory’s Aadhaar.
- Traders. Retail and wholesale traders can register, but only for priority sector lending from banks.
- Informal micro units. Micro units not registered under GST can use the Udyam Assist Platform, where banks, NBFCs and microfinance institutions help with registration.
The 45-day payment rule
Under section 15 of the MSMED Act, a buyer must pay a micro or small supplier by the agreed date, and that date cannot be more than 45 days from acceptance of the goods or services. If there is no written agreement, payment is due within 15 days.
If the buyer pays late, the supplier is owed compound interest with monthly rests at three times the RBI bank rate (section 16). The buyer cannot deduct that interest for income tax (section 23). Medium enterprises do not get this protection; it covers micro and small suppliers only.
The income tax rule for buyers
Under section 37(2)(g) of the Income-tax Act, 2025, the successor to the old section 43B(h), an amount owed to a micro or small enterprise beyond the section 15 time limit is allowed as an expense only in the year it is actually paid. Paying before the return due date does not help for these dues, unlike some other payments covered by section 37.
What to do now
- Suppliers: register on Udyam and quote your Udyam number on quotations and invoices, so buyers know the 45-day rule applies.
- Buyers: ask suppliers for their Udyam status and track payment dates against the agreed terms.
- Both: agree payment terms in writing. Without a written agreement, the limit is 15 days.
Common questions
Is there a fee for Udyam registration?
No. Filing Udyam registration has no fee.
Can a trader register on Udyam?
Yes. Retail and wholesale traders can register, for the limited purpose of priority sector lending.
Does the 45-day rule protect medium enterprises?
No. Only micro and small enterprises are protected suppliers under the MSMED Act.
If I pay a micro or small supplier late, can I still claim the expense?
Yes, but only in the tax year in which you actually pay it, under section 37(2)(g) of the Income-tax Act, 2025.
We register businesses on Udyam: see Udyam (MSME) registration. Keeping a clear record of what you owe and when it falls due is part of our accounting and bookkeeping work.
Sources: MSME Ministry notification S.O. 1364(E) of 21 March 2025 and circular of 24 October 2025; MSMED Act, 2006, sections 2, 15, 16 and 23; RBI circular of 7 July 2021; SIDBI; Income-tax Act, 2025, section 37.