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Companies Act, 2013 (India)

The Shop and Establishment Act regulates shops and commercial establishments in India, and requires registration within 30 days of starting a business.

A Shops and Establishment License is a legal document that grants permission for businesses to operate within a specific jurisdiction, as per the provisions of the Shops and Establishments Act. This license applies to various types of commercial establishments, including shops, offices, hotels, restaurants, and service-based businesses. It aims to regulate working conditions, protect employees’ rights, and ensure that businesses comply with local labor laws.

 

A Shops and Establishment License is a legal document issued by the local municipal authority or labor department that permits businesses to operate within a specific jurisdiction. This license is governed by the Shops and Establishment Act, which is applicable to all commercial establishments, such as shops, offices, restaurants, hotels, and other service-based businesses. The license ensures that businesses comply with the labor laws and regulations related to working conditions, employee welfare, and business operations.

Legal Compliance

The license ensures that the business is legally recognized and compliant with local laws and regulations. Operating without it may lead to penalties or business closure.

Employee Protection

It ensures that the business complies with labor laws, such as work hours, wages, holidays, and health and safety regulations, protecting the rights of employees.

Improved Business Credibility

A Shops and Establishment License adds credibility to your business, assuring customers and partners that the business operates legally and ethically.

Rights of Business Owners and Employees

The license enforces rights related to the working conditions of employees, such as proper pay, leave policies, and workplace conditions, creating a fair environment for both employees and business owners.

Ease of Business Expansion

Having a valid license helps in the smooth expansion of business operations, as it is often required when applying for permits, hiring employees, or opening new branches.

Tax Benefits and Government Support

Registered businesses with a Shops and Establishment License may be eligible for government benefits such as tax exemptions, schemes for small businesses, or access to subsidies.

Eligibility Criteria for Shops and Establishment License

The eligibility criteria for obtaining a Shops and Establishment License vary depending on the local municipality or state regulations, but generally include the following:

Type of Business

  • The license applies to any commercial or service-based establishment, such as:
    • Retail shops
    • Hotels, restaurants, and cafes
    • Offices, educational institutions, and hospitals
    • Any business where employees work regularly.

Ownership of the Business Premises

  • The applicant must either own or rent the premises where the business is operating. Proof of the business address, such as a rental agreement or property ownership document, is required.

Number of Employees

  • The license is required for any business that employs one or more people, whether part-time or full-time. The number of employees may affect the application process or the fee to be paid.

Compliance with Local Labor Laws

  • The business must comply with local labor laws regarding working hours, payment of wages, employee benefits, and working conditions. The license ensures that the establishment adheres to these standards.

Nature of the Business

  • Businesses involved in certain activities (e.g., manufacturing, food processing, healthcare) may have additional requirements or need specific permits or licenses, in addition to the Shops and Establishment License.

Minimum Age of Applicant

  • The applicant or the business owner must usually be at least 18 years old.

Clean Record

  • The business owner or establishment should not have any violations of previous licenses, municipal rules, or legal issues that could prevent them from obtaining the license.

Documentation

  • The business must provide necessary documentation, such as the business registration certificate (if applicable), proof of identity, proof of address, and details about the employees.

 

Checklist for Shops and Establishment License

Before applying for a Shops and Establishment License, ensure you have the following documents and information ready:

Application Form

  • Complete the application form for the Shops and Establishment License, available either online or at your local municipal office.

Proof of Identity

  • Provide a government-issued identity proof of the applicant or business owner (e.g., Aadhar card, PAN card, or passport).

Proof of Address

  • Submit a valid document confirming the address of the business premises. This could be a utility bill (electricity/water), property tax receipt, or rental agreement.

Business Premises Details

  • Provide a copy of the property ownership or lease agreement for the commercial property where the business is located.

Proof of Business Ownership

  • If the business is registered (e.g., as a partnership or private limited company), include the business registration certificate or any other document that proves the ownership.

Number of Employees

  • A list of employees, including their names, positions, and their work status (full-time, part-time).

No Objection Certificate (NOC)

  • Some local authorities may require an NOC from the property owner if the applicant is a tenant, or from fire and safety departments if applicable.

Photographs

  • Passport-size photographs of the business owner or the person applying for the license.

Additional Documents for Specific Businesses

  • Some businesses (e.g., food outlets, factories) may require additional licenses such as FSSAI certification or factory registration, so ensure to include those as needed.

Payment of Fees

  • Ensure payment of the requisite license application fee. The amount depends on the location, business type, and number of employees.

Necessary Documents for Shops and Establishment License

Application Form

  • A duly filled application form, available either online or at the local municipal office, depending on your location.

Identity Proof of Applicant

  • Government-issued ID proof of the business owner or authorized signatory (e.g., Aadhar card, PAN card, passport, voter ID, etc.).

Proof of Address of Business Premises

  • Valid proof of address of the business location (e.g., utility bill like electricity/water, property tax receipt, or rental agreement).

Proof of Ownership or Lease Agreement

  • A copy of the property ownership document or lease/rental agreement for the business premises.

Business Registration Certificate

  • If the business is registered (e.g., as a partnership firm, private limited company, etc.), a copy of the business registration certificate.

Photographs

  • Passport-size photographs of the applicant or authorized signatory.

No Objection Certificate (NOC)

  • NOC from the property owner (if renting) and sometimes from the local fire department or other regulatory bodies, depending on the type of business.

List of Employees

  • A list of all employees working in the business with details like their names, positions, and employment type (full-time, part-time).

Health and Safety Compliance (If applicable)

  • For businesses like food outlets or factories, additional documents like FSSAI (Food Safety and Standards Authority of India) certification, health permits, or safety compliance certificates may be required.

Payment Proof for License Fee

  • Proof of payment of the application fee, which may vary depending on the business type and location.

Documents necessary for filing SPICe+ form (INC-32) for the registration of a private limited company are outlined as follows:

A. For Indian Nationals serving as directors and subscribers:
  • Affidavit on stamp paper: a declaration by all subscribers affirming their intention to become shareholders of the company
  • Office address proof like the Rental Agreement or Ownership Deed
  • Electricity bill, water bill and other utility bills of the last two months
  • Copy of approval if required
  • Trademark registration details
  • NOC from property owner
  • Proof of identity and address
B. Required Documents For Foreign Nationals serving as directors/Shareholders
  • Passport: Proof of identity
  • Address proof: Accepted documents include a driving license, residence card, bank statement, or government-issued identification with a valid address.

Types of Shops and Establishment License

The Shops and Establishment License varies based on the nature of the business. The three main types of licenses are:

Retail Shops License

This license is required for businesses that sell goods directly to consumers. It covers retail outlets such as clothing stores, grocery shops, electronic stores, and other product-based businesses.

Commercial Establishment License

This license applies to offices, business organizations, and institutions offering services rather than products. It includes establishments like IT companies, law firms, educational institutions, and medical clinics.

Catering or Hospitality License

Required for businesses in the food and hospitality sector, including restaurants, cafes, hotels, and bars. These establishments must also comply with food safety regulations (such as FSSAI registration) in addition to the Shops and Establishment License.

Characteristics of Shops and Establishment License

 

Legal Requirement for Operation

  • The Shops and Establishment License is a mandatory legal requirement for all businesses, including shops, restaurants, hotels, offices, and service establishments, to operate within a particular jurisdiction.

Regulation of Working Conditions

  • It ensures that businesses comply with local labor laws concerning working hours, holidays, wages, and leave policies for employees, creating a safe and fair work environment.

Applicability Across Business Types

  • The license is applicable to various types of businesses, including retail shops, commercial establishments (offices, service-based businesses), and hospitality establishments (restaurants, hotels, etc.).

Employee Protection

  • It focuses on safeguarding the rights of employees, ensuring they receive timely wages, proper working conditions, and are not exploited by regulating aspects like weekly holidays and overtime compensation.

Promotes Business Credibility

  • Having a valid Shops and Establishment License increases the credibility of a business, assuring customers, employees, and government authorities that the business is operating within the legal framework.

Jurisdiction-Specific

  • The license is issued by local municipal or labor authorities and is valid within the jurisdiction where the business is located. Different states or cities may have specific provisions under their respective Shops and Establishments Acts.

Renewal Requirement

  • The Shops and Establishment License typically needs to be renewed periodically (e.g., every 1-5 years), ensuring businesses remain compliant with updated regulations and labor laws.

Promotes Transparency and Fair Practices

  • By regulating working conditions and employee welfare, it ensures that businesses operate with transparency and fairness, contributing to better employee retention and customer satisfaction.

How to Register for Shops and Establishment License

step

Prepare Required Documents

  • Before starting the registration process, gather the necessary documents such as proof of identity, proof of address of the business premises, lease/rental agreement, business registration certificate (if applicable), list of employees, and photographs of the owner or authorized signatory.

Fill Out the Application Form

  • Visit your local municipal corporation’s website or the relevant government portal for the Shops and Establishment License registration.
  • Complete the application form with details about your business, such as:
    • Business name and address
    • Type of business (retail, office, hotel, etc.)
    • Number of employees
    • Name and contact details of the business owner or authorized signatory.
Submit the Application
  • Submit the completed form along with the required documents either online (through the municipal or state government portal) or offline (at the local municipal office).
  • If applying offline, make sure to visit the office during working hours, submit the form, and pay any application fees.

Pay the Required Fees

  • The application fee for the license depends on the location, the type of business, and the number of employees. Pay the fee online or as per the instructions provided by the municipal office.

Verification Process

  • The concerned authorities will verify your documents and details provided in the application. They may inspect your business premises to ensure compliance with the necessary rules and regulations.

Issuance of the License

  • After the verification, the Shops and Establishment License will be issued. This may either be handed over to you physically or sent via email, depending on the local authority’s process.
  • The license will specify the business’s name, address, license number, and validity period.

Renewal

  • Ensure you renew the license periodically (usually every 1-5 years) as per the local regulations to maintain legal compliance for your business.

 

Private Limited Company Registration Fees

There are several criteria that determine the total fees structure to form a private limited business in India. Fees like stamp duty and government fees are required. Professional fees will be assessed if you engage any experts. Apart from this, applications for filing DSC, DIN, Notary fees, PAN, TAN and GST registration should be accounted for. An all-in-one platform for online private limited company registration in India is offered by Vakilsearch. Depending on your demands, you can choose from our affordably priced packages and begin the registration process.

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