Shop and Commercial Establishment Registration: Everything You Need to Know

A Shops and Commercial Establishment registration renders a legal platform for the businesses to work in a specific state & to open a current bank account. Countering legal obligations^[1] such as periodic inspection become considerably easier after obtaining this certification. In short, a shop or establishment registration can ensure the well-being of your business from a legal viewpoint.

What is a Commercial Establishment?

Shop and Establishments Act defines a commercial establishment as a place where business-related activities are undertaken. According to the said Act, the commercial establishment can exist in the form of the following elements, those are as follows:- 

Opening a new business in India is subjected to plenty of legal obligations cited under the Shop and Commercial Establishment Act; hence it becomes important to avail all possible information about the same.

The Act comes under the canopy of the state legislature and safeguards the employees’ rights belong to the unorganized sectors and ensures their well-being in terms of code of conduct and payments. 

What are the Objectives of Shop & Establishment Act?

• The ultimate objective of the Shop & Establishment Act is to render legal protection to the employer’s rights & employees. 
• It endeavors to aid employees with benefits regardless of the nature or type of establishment they belong to. 

Applicability of Shop & Establishment Act

Shop and Commercial Establishment Act encompasses shops, restaurants, commercial establishment, hotels, eating houses, and theatres. The aforesaid establishments are required to avail of Shop and Commercial Establishment Certification within 30 days of the commencement of work. 

Primary Governing Attributes

• Hours of work
• Payment/ Deductions of wages
• Terms of Service of employees
• Working conditions of employees
• Leaves and Holidays they get
• Prohibition of employment of children
• Employment of young person or women
• Cleanliness, lighting and ventilation of the establishment
• Precautions in place against fire accidents

How an Establishment can Avail of Shops and Commercial Establishment Registration?

• Regulations, fees, and processing time, related to Shop and establishment act vary from state to state. Under the Shop & establishment regulations, the registration fee, processing time, etc may differ according to the state where the shop/establishment is registered.
• After completing 30 days time period from the establishment date, the employer is legally bound to send an application to the official who is in charge. It ought to be agreed in form along with applicable fees. 
• It’s application for the Shop and Establishment Act must contain the following details and documents:-

1. Employer’s name
2. Name of the shop/establishment
3. Official Address of the shop/establishment
4. Category related to establishment
5. Number of employees
6. Commencement date of the establishment.

• You need to attach the bellow mentioned documents while applying for the Shop and Commercial Establishment Registration, which are as follows:-

1. Photo of the premises displaying the name and address of the same.  
2. Certification of Incorporation. 
3. AoA and Memorandum of Association or LLP agreement of the premises.
4. PAN card/ DL/ Aadhar Card/ Voter ID Card/ passport. 
5. List of Directors as well as their ID and address proof. 
6. Commercial Address Proof. 
7. Partners consent in written or Board Resolution. 
8. Details of employees working in the establishment. 

• The Labor department of each state is accountable for processing the registration application. 
• Generally, the district labor officer comes upfront for undertaking the task of verification as per the Shop and Establishment Act.
• The inspector has legally entitled to bestow shop and establishment registration certificates.
• If your registration meets the predetermined stipulates cited under the said act, then the authority will grant the registration certificate. 
• The registration certificate is bound to be displayed at premises where business activities were undertaken. 
• Shop and Commercial Establishment Registration is renewal in nature.

What type of Fee Structure is Applicable to Shop and Commercial Establishment Registration? 

The registration fee related to Shop and Commercial Establishment Registration differs from state to state. The fee also depends on the no. of workers serving the establishment at a fixed monthly payment.

Every employer is under the legal obligation to render valid information about their workforce while filling up the registration form. The final amount of the registration fee will be decided by the official responsible for processing the application. 

Viable Benefits Offered by the Shop and Commercial Establishment Registration

• A shop and establishment certificate serves as a legal identity for the establishment. It gives businesses the right to avail activities in a specific state. 
• The certificate helps businesses to open the current account in their respective banks. 
• The certificate can let businesses to avert time-consuming inspection conducted by the government’s official. 
• The Shop & Commercial Establishment Registration renders string of the government-based benefits to the small businesses entity established by the Department of Industries and Commerce.

Key Takeaways

• The employer having less than 10 workers must compulsorily furnish an online intimation of commencement along with requested documentation. The authority, in response, will bestow a receipt in Form G to the applicant online. 
• All establishment working under the canopy of the Central and State government is exempted from the Shops and Commercial Establishment Act. 
• The closing of the establishment must be shared with the official via a notification within 10 days where such establishment is removed from the registration. 
• Shop and Establishment have some strict norms regarding the work timing of the employees. According to the said act, no employee is permitted to work for more than 9 hours a day or 48 hours weekly. 
• One day off is mandatory for all establishments (except the one dealing with pharmacy business) registered under Shop and Establishment Act. 
• Employees are entitled to avail 7 days off in a year as casual and medical leave, respectively. 

Conclusion

Shops and Commercial Establishment registration is essential for every establishment that comes under the purview of the Shops and Commercial Establishment Act. Penalties will be levied accordingly on the establishment that fails to comply with the provision of the said act. Make your way to CorpBiz’s professional to avail top-notch and cost-effective services related to registration. 

Read our article:An Outlook on Benefits of Shop and Establishment License