The Union Budget 2025-26 (presented 1 February 2025) raised the MSME classification ceilings substantially. Investment limits went up roughly 2.5x. Turnover limits doubled. The new numbers took effect from the start of FY 2025-26, and as of now (mid-2026), they're what the Udyam portal uses to classify every new and migrated registration. This article walks through what changed, what stayed the same, and what it means for businesses sitting near a slab boundary.
Need to register or migrate under the new limits? Use our Udyog Aadhar registration service. We pick the correct slab based on your actual ITR and GST numbers.
The New Limits (FY 2025-26)
| Category | Investment in Plant & Machinery | Annual 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 the Old Limits Compared
For context, here's what the slabs looked like under the 2020 framework that the 2025-26 changes replaced:
| Category | Old Investment | Old Turnover | Change |
|---|---|---|---|
| Micro | ₹1 crore | ₹5 crore | 2.5x / 2x |
| Small | ₹10 crore | ₹50 crore | 2.5x / 2x |
| Medium | ₹50 crore | ₹250 crore | 2.5x / 2x |
The multiplier is consistent. Investment ceilings went up 2.5x across the board; turnover ceilings doubled. The Finance Minister's budget speech framed this as inflation accommodation, but the practical effect is that several thousand mid-sized firms that had outgrown the "Medium" classification under the old limits are once again MSME-eligible.
What Actually Stayed the Same
- The dual-criteria rule: A business still has to meet both the investment AND turnover ceiling for a slab. Cross either and you move up.
- Composite category: Manufacturing and services are still treated under one combined framework. There's no separate slab for traders or services-only firms.
- The registration mechanism: Udyam portal, Aadhaar-linked, paperless. The form is the same. The slabs are what changed.
- Auto-reclassification logic: Udyam still pulls turnover from GST returns and investment data from ITR filings to keep your slab current. If you cross a ceiling, the portal moves you up automatically (and notifies you).
Who Actually Benefits From the New Slabs
Mostly two kinds of businesses:
- Growing firms near the old ceiling. A manufacturing business with ₹6 crore turnover was Small under old rules, but now sits at the top end of Micro. Lower-slab status means better CGTMSE terms and more relaxed reporting under Samadhan.
- Mid-sized companies that had aged out. Firms with ₹200-300 crore turnover were outside the MSME framework entirely under old limits. Many are now Medium-classified again and can re-apply for MSME benefits they previously lost access to.
If your turnover and investment both sit comfortably inside the old slabs, the change is mostly cosmetic for you. The number on your certificate may now show "Micro" where it once said "Small", but the actual scheme benefits track to the new slab automatically.
What This Means If You Have an Old Udyog Aadhar Number
If you registered before July 2020 and never migrated to Udyam, the slab revision doesn't help you yet. Your old UAM number is not recognised by the Udyam portal's auto-classification engine. You'll need to migrate first. The process:
- Open udyamregistration.gov.in
- Choose "For those having registration as UAM"
- Enter your old UAM number and verify with OTP on your registered mobile
- Re-confirm or update PAN, GST, address, and financial figures
- Submit. The new Udyam certificate is issued with your classification under FY 2025-26 limits
Once you have the new certificate, the slab is automatically applied. You don't need to request reclassification separately.
Common Questions About the 2025-26 Changes
When did the new limits actually take effect?
From the start of FY 2025-26 (1 April 2025). They were announced in the Union Budget speech on 1 February 2025 and notified through the MSME ministry shortly after.
Will my Udyam certificate get reissued automatically with the new classification?
The Udyam portal updates classification automatically based on your latest ITR and GST data. You don't need to download a new certificate; the slab shown in the portal record reflects the current rules. If you need a fresh printable copy, log in and use "Print Certificate".
I'm right at the Micro/Small boundary. Which slab do I land in?
Whichever criterion you cross first puts you in the higher slab. A firm with ₹3 crore investment (over the ₹2.5 crore Micro cap) but ₹8 crore turnover (under the ₹10 crore Micro cap) is Small, not Micro. The portal is strict about this; there's no rounding down.
Do the new limits change CGTMSE or CLCS benefits?
Not the scheme caps themselves. CGTMSE collateral-free credit is still capped at ₹5 crore, CLCS subsidy is still capped at ₹1 crore. What changes is who qualifies as Micro or Small for those schemes. More firms now fit, but the cheque size per scheme hasn't been raised in step.
Practical Things to Check on Your Side
- Log in to the Udyam portal and confirm your current slab matches the new ceilings. If it still shows the old classification, that usually means your ITR or GST data hasn't synced yet.
- If you're a bank or NBFC counterparty, your priority-sector lending category may have shifted. Ask your relationship manager to refresh your file under the new slab.
- If you've already submitted tender bids using the old classification, check whether the procuring department has updated their MSME reservation tables. Some PSUs are still on the 2020 limits as of mid-2026.