Shop and Establishment License – An Overview
Every small time hotel and shop has to secure the shop and establishment license for the purpose of carrying out business activities. However, this license would vary based on the requirements of the state. For example, the shops and establishments license for Karnataka would be different from the procedure for shops and establishments in Delhi.
Hence it is crucial for the applicant to understand the Central rules as well as the state rules related to shops and establishments before making an application. Moreover, these rules regulate employees working in the organised sector as well as the unorganised sector. Different working conditions have to be complied by the applicant.
Apart from this, the working conditions and terms of employment are also regulated by this license. Therefore it is important to adhere to the requirements of the state.
Statutory Meaning of Shop and Establishment License
This license would allow the shop or establishment to operate normally. Apart from this, the license also regulates workers (casual, full time and part-time) when they are employed in these establishments. The working conditions of workers are stated in these establishments. Apart from this, the rights of the workers are also protected under the shops and establishments act.
The Shop and Establishment registration is a license provided to the applicant for carrying out the business of the shop and establishment. This certificate will enable the applicant to carry out operations of the business on a day to day basis without any interruptions.
The primary regulatory authority for shops and establishments license is the department of labour. This authority administers and changes the requirements for shops and establishments in India.
Which Establishments require the Shop and Establishment License?
Usually Retail outlets and shops which procure products would require this form of license to operate. New shops also have to compulsorily secure this license.
Any small time eatery, road side eatery, a catering business and a hotel would require this license.
Any small hotel to large hotel would require this form of license to operate. The restaurants which are attached to the hotel would also require this license.
Any other business place would require this license based on the conditions imposed by the state. This will also include theatres, amusement parks, and workspace and service spaces.
Objectives of Shop and Establishment Registration
The following are the objectives of this form of registration:
- To ensure the rights of workers are protected. This would include ensuring that the workers are adequately compensated and treated well in the establishment.
- To ensure that the business complies with the requirement of state to state registration.
- To ensure that there are better standards of employment created on a daily basis.
Why is it required to obtain the Shop and Establishment License?
Every shop and commercial establishment requires obtaining this license for the following reasons:
Usually a bank account opened for the business purpose requires this form of license. Hence it is crucial, that the applicant ensures to file the application within the prescribed time. The applicant has to register under the shop and establishment license usually within 30 days of commencing the business.
Apart from the bank account requirement, businesses having this license would not have any problems and issues during inspection by the department inspector. Hence businesses have to consider this license immediately after commencing business.
Compliance with this form of registration is mandatory. Any shop or establishment complying with the above requirement would have minimum issues with government agencies and departments.
Benefits of Shop and Establishment Registration
The following benefits are present with Shop and Establishment Registration:
All businesses and shops secure this license to comply with the requirements of the act. Apart from this, every individual requires this form of registration based on the requirements of the state.
Further Registration becomes Simple
Securing this license would enable the business with seamless registration. Securing prospective registration becomes simple with this form of registration.
Proof of Establishment
Any shop or establishment, with this license will be reputed in the eyes of the public. The shop or business would have some form of proof of evidence of establishment through this license.
It is compulsory to secure this form of license to open a business bank account. Usually, banks would require this license for registering the bank account. Hence under this process, it is compulsory to open the bank account. Apart from this banks, would provide some form of incentives to shops and commercial establishments.
Usually a registered shop and establishment can secure loan facilities from banks seamlessly when compared to an unregistered business. Apart from this, there are different forms of benefits availed by registering the establishment.
Eligibility for Shop and Establishment Registration
The following have to be considered by a business before going for the above form of license:
Classification of Business
First and foremost the applicant has to check the eligibility criteria whether the business he is starting or establishing falls under the requirements of the Shops and Establishments Act. This can be carried out by the applicant by looking at the latest notification for types of shops and establishments. This will be present in the specific schedule or annexure of the act.
Compliance with the Act
If the above requirement is considered then the applicant has to check for compliance with the requirement of the act. If the requirement corresponds with the act, then the applicant has to take active steps to comply.
State Wise Check
As mentioned earlier, shop and establishment registration and respective regulations apply state wise. Though there is a central regulation relating to the operation of shops and establishments in India, there are respective state regulations. For example, the shop and establishment registraiton procedure would be different when going to the state or Karnataka when compared to Tamil Nadu. Hence it is crucial to understand the requirements of the state before considering the above registration.
Requirements for Obtaining the Shop and Establishment License
The following requirements are considered before obtaining the shop and establishment license:
Information on the Employer and Manager
Information on the employer and the manager will include all the information pertaining the employer and manager. This will include the name of the individuals.
Postal Proof of the Business
The registered business address of the business must be provided for shop and establishment registration.
Information on the Establishment
All information pertaining to the establishment must be provided. This will include the name of the establishment and other business information as required.
Category of Establishment
The applicant has to indicate the category of establishment. For example, if the applicant is starting a retail outlet, then the category of establishment will be retail outlet and shop. The applicant has to indicate the category of establishment when going for shop and establishment registration.
Number of Workers
Apart from the above information, the applicant must provide information on the number of workers employed in the establishment. This would also include providing detailed information, if the workers are full time employees or part time employees of the establishment.
Procedure for Shop and Establishment Registration
The following procedure is required for online shop and establishment registration:
Online Application Form
The applicant has to first download the form from Online website of the state. This would be done from the official website of the respective state where the shop or establishment has to be set up.
Fill in the Information
In the second step the applicant must fill in all required information regarding the shop. This must contain the following information:
- Name of the shop
- Details of the manager and the owner
- Details of the workers
- Other Information as asked (Address Proof and NOC)
- Aadhaar Number.
Submit the Form
After the information is provided then the form must be submitted to the inspector of the state for the respective shop and establishment. The fees also must be paid by the applicant.
Verifying the Application
In the next step, the application is verified. Apart from this, the documents submitted must be appropriate and correspond to the requirements.
After verification, the license would be approved for Shop and establishment registration. Usually, this process would take about a month in major metropolitan cities.
- Identification Details of the Employer such as the Aadhaar, PAN Number, Passport Size Photographs
- Photograph of the Shop
- Rent Agreement
- Copies of Utility Bills such as the water or electricity- This bill should not be older than two months
- In Case of Company, Certificate of Incorporation, MOA and AOA
- In case of Partnership, then the copy of the Partnership Deed must be provided
- In case of an LLP then the copy of the LLP agreement must be provided
- Certificate of Incorporation Corresponding to the Companies Act, 2013
- Co-operative Society – all the information pertaining the members of the society
- RTO permit if required
- Resolutions taken by the Directors
- Licenses- FSSAI , Drug License, Chemical License
- In case the business is a cyber cafe, then a No Objection Certificate must be provided by the police
- IEC certification (Import Export Certification)- In case the business is carrying out imports and exports
- No Objection Certificate from the District and respective collector
- No Objection Certificate for opening some form of mill
- Excise License- in case of opening a wine or beer shop
- For Security Services – respective License issued by the police department
- SEBI certificate if starting a share brokering business.