The Government of India is committed to make India totally self-reliant i.e. “Atmnirbhar Bharat”. The matter of changing the definition of MSMEs upwardly was under process, finally it got notified vide notification S.O. 2119(E) dated 26th June 2020 –the Central Government, notified certain criteria for classifying the enterprises as micro, small and medium enterprises and specifies the form and procedure for filing the memorandum with effect from the 1st day of July, 2020.

What to do for existing MSME?

  • All existing enterprises registered under EM–Part-II or UAM shall register again on the Udyam Registration portal on or after the 1 st day of July, 2020.
  • All enterprises registered till 30th June, 2020, shall be re-classified in accordance with this notification.
  • The existing enterprises registered prior to 30th June, 2020, shall continue to be valid only for a period up to the 31stday of March, 2021. 
  • An enterprise registered with any other organization under the Ministry of Micro, Small and Medium Enterprises shall register itself under Udyam Registration.

As stated above the Criteria for classifying the enterprises has been changed and with effect from 1st of July 2020 the following shall be considered only since it supersedes the notifications earlier published regarding the criteria for classifying the MSME :-








Investment in plant and machinery or equipment does not exceed Rs. 1/- Crore


Investment in plant and machinery or equipment does not exceed Rs. 10/- Crore


Investment in plant and machinery or equipment does not exceed Rs. 50/- Crore




It does not exceed Rs. 5/- Crore

It does not exceed Rs. 50/- Crore

It does not exceed Rs. 250/- Crore

A composite criterion of investment and turnover shall apply for classification of an enterprise as micro, small or medium.

If an enterprise crosses the ceiling limits specified for its present category in either of the two criteria of investment or turnover, it will cease to exist in that category and be placed in the next higher category.

Important to note that if an enterprise is not performing well in that case no enterprise shall be placed in the lower category unless it goes below the ceiling limits specified for its present category in both the criteria of investment as well as turnover.

Further to note that: - All units with Goods and Services Tax Identification Number (GSTIN) listed against the same Permanent Account Number (PAN) shall be collectively treated as one enterprise and the turnover and investment figures for all of such entities shall be seen together and only the aggregate values will be considered for deciding the category as micro, small or medium enterprise.

“Investment in Plant & Machinery or equipment” - The calculation of investment in plant and machinery or equipment will be linked to the Income Tax Return (ITR) of the previous years filed under the Income Tax Act, 1961.

The expression ―”plant and machinery or equipment” of the enterprise, shall have the same meaning as assigned to the plant and machinery in the Income Tax Rules, 1962 framed under the Income Tax Act, 1961 and shall include all tangible assets (other than land and building, furniture and fittings). 

IMPORTANT - The cost of pollution control, research and development, industrial safety devices and such other items as may be specified, by notification, shall be excluded.

In case of a new enterprise, where no prior ITR is available, the investment will be based on self-declaration of the promoter of the enterprise and such relaxation shall end after the 31st March of the financial year in which it files its first ITR.

The purchase (invoice) value of a plant and machinery or equipment, whether purchased first hand or second hand, shall be taken into account excluding Goods and Services Tax (GST), on self-disclosure basis, if the enterprise is a new one without any ITR.


Information as regards turnover and exports turnover for an enterprise shall be linked to the Income Tax Act or the Central Goods and Services Act (CGST Act) and the GSTIN.

Exports of goods or services or both, shall be excluded while calculating the turnover of any enterprise whether micro, small or medium, for the purposes of classification.

The turnover related figures of such enterprise which do not have PAN will be considered on self-declaration basis for a period up to 31st March, 2021 and thereafter, PAN and GSTIN shall be mandatory.

Further to note thatAn enterprise having Udyam Registration Number shall update its information online in the Udyam Registration portal, including the details of the ITR and the GST Return for the previous financial year and such other additional information as may be required, on self-declaration basis.

This is important for enterprise to update the relevant information within the specified period failure to it will render the enterprise liable for suspension of its status.

The enterprise will continue in its present category till the closure of the financial year and it will be given the benefit of the changed status only with effect from 1st April of the financial year following the year in which such change took place. A communication will be sent to the enterprise about the change in the status.