Guides · MSME
Udyam registration, explained
Udyam registration is the Government of India's registration for micro, small, and medium enterprises. It is what formally makes a business an MSME — and it is what unlocks the 45-day payment protection for micro and small suppliers.
What Udyam registration is
Udyam registration is the online MSME registration on the government's Udyam portal. A registered enterprise gets a Udyam Registration Number and a certificate that records its classification as micro, small, or medium.
Classification is based on investment in plant and machinery or equipment, together with annual turnover. It is the registered status, at the time of supply, that carries the MSME protections.
Why registration matters
For a micro or small supplier, Udyam registration is what activates the MSMED Act's Section 15 and 16 delayed-payment protections and the buyer's Section 43B(h) income-tax consequence for paying late. Without registration at the time of supply, those protections do not apply.
Registration also supports priority-sector lending and various government schemes. Note that for wholesale and retail traders, Udyam registration is recognised only for priority-sector lending, not the delayed-payment protections.
How Lekha uses supplier status
Lekha ages each receivable against the MSME 45-day clock, which only matters where the supplier is a registered micro or small enterprise at the time of supply.
Lekha records what your documents say and tracks the money on both sides — what you owe and what you are owed. It records and tracks; it does not replace your accountant.
Questions
- What is Udyam registration?
- It is the government's online MSME registration, giving a business a Udyam Registration Number and a certificate recording its micro, small, or medium classification.
- Why does Udyam registration matter for late payments?
- The MSMED Act's 45-day payment protections apply to micro and small suppliers registered on the Udyam portal at the time of supply. Registration is what activates them.
- Do traders get the 45-day protection through Udyam?
- No. For wholesale and retail traders, Udyam registration is recognised only for priority-sector lending, not the delayed-payment protections.
This guide is general information, not legal or tax advice. Confirm the current rules and your own circumstances for any specific case.