Udyam Registration is a free, paperless, self-declaration registration on udyamregistration.gov.in, based on Aadhaar and PAN, that classifies an enterprise as micro, small or medium using investment and turnover data pulled from income-tax and GST records. A registered micro or small enterprise can file delayed-payment claims on MSME Samadhaan and is covered by Sections 15 to 18 and Section 43B(h).
How Udyam Registration works in India
The applicant enters Aadhaar, verifies by OTP, enters PAN and GSTIN (where applicable), selects the activity (manufacturing or services) and NIC codes, and declares investment and turnover. The system issues a permanent Udyam Registration Number (URN) and an e-certificate with a QR code. Classification is checked against the income-tax return and GST returns; if the enterprise crosses a threshold, it moves up a category after the Act's transition period.
- One registration per enterprise, covering all units and activities.
- Manufacturing and service enterprises are both eligible.
- The certificate shows the category (micro, small, medium) and the date of registration.
Why it matters for getting paid
Without Udyam registration a supplier cannot file on MSME Samadhaan, cannot rely on Section 16 interest and cannot point the buyer to Section 43B(h). With it, a ₹10 lakh overdue invoice carries interest that compounds at three times the bank rate and a tax consequence for the buyer. Register before supplying: Councils generally look at whether the supplier was registered at the time of the supply. See the MSME definition for the thresholds.
How FundRaksha uses it
The first document FundRaksha asks for is the Udyam certificate, because it determines whether the MSMED Act route is open. Clients who are eligible but unregistered are told to register immediately so that future supplies are protected. FundRaksha has onboarded 1,000+ businesses and most MSME clients see settlement after the first notice; the fee is 30% of recovery.
Worked example (hypothetical)
Two Jaipur handicraft exporters each supply ₹7,00,000 to the same Mumbai buyer, due 1 May, unpaid for 10 months. Exporter A registered on Udyam in 2023; Exporter B never did. Exporter A files on Samadhaan and, assuming a 6.5% bank rate (19.5% a year, monthly rests), claims about ₹1,22,000 in interest plus principal, with no court fee. Exporter B must file a civil suit, pay court fees on ₹7,00,000, and will typically be awarded interest at a rate the court chooses, often 9% to 12%, around ₹52,500 to ₹70,000 for the same period. Registration is free and takes minutes.
Last reviewed: 2026-10-08. Information for Indian businesses; not legal advice.