The Ministry of Micro, Small, and Medium Enterprises (MSME), Government of India, has released a major notification on March 21, 2025, revising the classification norms for MSMEs. These expanded limits for investment and turnover will come into effect from April 1, 2025.
The notification [S.O. 1364(E)] also reaffirms the government’s commitment to address delayed payments to MSMEs and enhance refinancing support to keep India’s growth engine running smoothly.
New MSME Classification Criteria (Effective April 1, 2025)
Key Benefits of the Revised MSME Definition
1. Wider Eligibility for MSME Benefits
More businesses, especially fast-growing startups and exporters, can now register and avail:
- Collateral-free loans under CGTMSE
- Priority lending by banks and NBFCs
- Access to government tenders and procurement schemes
- Subsidies under technology upgradation and cluster development schemes
2. Eases Scaling Without Losing MSME Status
Many firms lose MSME benefits once they cross the old limits. These new thresholds allow more flexibility to scale while retaining MSME classification.
Delayed Payments to MSMEs: What You Must Know
Delayed payments are one of the biggest challenges faced by MSMEs in India. To protect MSMEs, the MSMED Act mandates:
Payment Timeline:
- Buyers must make payments within 45 days of accepting goods/services.
- If delayed beyond 45 days, compound interest at 3x RBI’s bank rate is payable.
Legal Protection & Reporting:
- MSMEs can file complaints on the Samadhan Portal: samadhaan.msme.gov.in
- Buyers delaying payments are now named publicly if default exceeds a threshold.
Income Tax Disallowance (New Rule from FY 2023–24):
As per the new income tax provisions, any payments due to registered MSMEs beyond the allowed time (15 days/45 days) will be disallowed as a business expense under Section 43B(h) of the Income Tax Act.
This makes timely payments not just ethical — but also tax-effective.
MSME Refinancing & Credit Support Initiatives
To boost credit flow to MSMEs, the government and RBI have launched several targeted schemes:
1. MSME Refinancing via SIDBI
- SIDBI offers refinance support to banks and NBFCs for lending to MSMEs.
- Covers both working capital and term loans.
2. Credit Guarantee Fund (CGTMSE)
- Offers collateral-free loans up to ₹2 crore
- Loan backed by government guarantee (up to 85%)
3. Emergency Credit Line Guarantee Scheme (ECLGS)
- Extended till March 2026 for MSMEs in select sectors
- Helps firms facing stress post-COVID and due to global slowdowns
4. TReDS Platform
- RBI-backed platform where MSMEs can discount invoices with large buyers
- Enables faster access to funds through reverse factoring
Effective Date
These revised criteria are applicable from April 1, 2025, and will be reflected in MSME registration on the Udyam portal.
What MSMEs Should Do Right Now
- Check Updated Eligibility – Match your investment & turnover against new limits
- Register or Update MSME Status – Visit Udyam Registration Portal
- Inform Your Accountant – For income tax deduction planning under Sec 43B
- Talk to Your Banker – Explore CGTMSE, SIDBI & invoice discounting options
- Raise Pending Payment Complaints – Use Samadhan Portal or file under MSMED Act
Frequently Asked Questions (FAQ)
Q1. Are the new limits applicable to all existing MSMEs?
Yes, existing enterprises can continue or update classification as per new limits from April 1.
Q2. Will old registrations be auto-updated?
No, you may need to self-update on the Udyam portal to reflect new investment/turnover.
Q3. Is turnover based on gross or net sales?
Turnover is based on gross revenue (excluding GST), as per income tax/GST filings.
Q4. Can a firm be classified as MSME for tax purposes too?
Yes, but only registered MSMEs under Udyam will get protection under Sec 43B & CGTMSE.
Q5. Is the payment limit 15 days or 45 days?
45 days if there’s a written agreement
15 days if no written contract
Stox N Tax 
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