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Shalini Singh
| Updated: 11 Dec, 2019 | Category: Company Registration, Shop and Establishment

A Complete Overview of Shop and Establishment Act And How to Obtain its License?

Shop and Establishment License

When you are thinking of starting a business, the only thing that comes to your mind is the Business Plan. But besides the Business Plan, there are several other things that you need to look upon.  And this includes the Shops and Establishment Act, which is an important regulation that you need to take care of. Here, we will have a detailed overview of the Shop and Establishment License act and how can you obtain the license.

What is an Establishment?

Under Shops and Establishment Act, term Establishment means a shop or any other commercial Establishment. These include the businesses in India like shops, restaurants, cafes etc. for which Government has set various rules and regulations which varies state to state.

Shop and Establishment License Act

It is an Act to consolidate and amend the law relating to the regulation of hours of work, payment of wages, leave, holidays, terms of service and other conditions of employment of persons employed in shops, commercial establishments, establishments for public entertainment or amusement and to provide for some issues connected in addition to that.

Who can apply for the Shop and Establishment License?

The following establishments need to apply for the Shops and Establishment License

  • Wholesalers or the retailer’s shops and establishments;
  • Service Centers;
  • Warehouses, Store-rooms, and Godowns;
  • Hotels;
  • Eating joints and restaurants;
  • Entertainment houses, Amusement parks, Theaters;
  • Additionally, any other working places.

Why do the Businesses in India need to have the Shop and Establishment License?

  • The Shop and Establishment License safeguards the rights of the employees working in these establishments such as hotels, restaurants, theatres etc.
  • Also, this Act aims to set better working conditions for these employees by regulating their wages, holidays, incentives etc.

What are the Provisions covered under the Shop and Establishment Act?

Different State Government has various provisions under the shop and establishment Act which can be checked on their respective state government website.

Following are the provisions regulated under the Shop and Establishment Act[1]:

  • Minimum and Maximum working hours of the employees or labours.
  • The time duration for the beak and lunch timing.
  • Issuance of laws to prohibit child labour in factories and other establishments.
  • Employment of Women.
  • Number of week holidays to be allotted
  • Office timing of the establishments/shops.
  • Extra wages for overtime.
  • Accident Coverage employees
  • Preventive measures against fire
  • Proper ventilation and lighting for workers
  • Clean and hygienic premises for the workers
  • Conditions and timing for the payment
  • Regulation of deductions on the payments
  • Leave Policy
  • Dismissal
  • Employee’s proper record keeping.

What are the eligibility criteria for obtaining the Shop and Establishment License in India?

Following are the things which you should check before you apply for the Shop and Establishment License:

  • The first thing that you should look over is that the business or the establishment for which you want to obtain the license is covered under the Shop and Establishment Act or not. If it is so, then read the rules and regulations carefully keeping in mind your concerned state government.
  • Additionally, you need to fill the online application for it within 30 days of establishing the business.

What are the benefits you can enjoy after obtaining the Shop and Establishment License?

  • It provides a legal identification to your establishments.
  • This license can act as Business proof when you apply for further registrations in India.
  • After obtaining this license, you can provide this license in banks by which that can open an account (Bank Account) in the name of the establishment or shop.
  • Also, this license can help you in availing loans from the banks, which can help raise investments for your proposed business establishment.

Read our article:How to Obtain an FSSAI License in India: Full Guide

What are the Documents required for obtaining the Shop and Establishment License?

Following is the Checklist of Documents required for the Shop and Establishment License:

  • Identity proof such as Aadhar card or PAN card or driving license of the employer.
  •  A Passport size photograph of the employer or the owner of the establishment.
  • A photo of the shop or establishment along with the employer.
  • A copy of the rent agreement (in case of a rented apartment).
  • Any utility bill of the working premises
  • A list of number of trustees – In case of a trust
  • ROC
  • Memorandum of Association
  • A file containing the number of members and chairman – for the co-operative societies
  • Address Proof of the Establishment.
  • Partnership deed with all the vital information such as company name, name, the signature of the respective partner and share percentage of partners
  • Copy of the RBI permission
  • Incorporation Certificate as per the Companies Act.
  • Transportation Permit from the RTO (Regional Transport Office).
  • Food or FSSAI license
  • Food and drug license
  • A copy of the collector permission.
  • A NOC ( No Objection Certificate) by the respective police department for a Cybercafe
  • IEC Certificate (Import Export Code) .
  • Excise license –  for a restaurant or wine shop
  • Share broker Certificate by SEBI.

What is the Procedure for Obtaining the Shop and Establishment License?

  • Apply with respective State Government

At first, download the registration application form from your respective state official website where your shop or establishment is located.

  • Fill the required details

You need to fill in the following information in the form:

  • Name of your establishment/shop
  • Personal details of the employer
  • Personal details of the employees working at that time
  • Registered establishment address along with NOC or rent agreement (only for rented premises)
  • Details of the PAN Card of the employer
  • Submit the application

Submit the application form to the Chief Inspector in charge of the Shop and Establishment Act with the prescribed fees amount.

  • Application Verification

After you submit the application form, the concerned authorities will verify all the documents.

  • Issuance of  the License

It usually takes 15-20 days for the document verification after which the Shop and Establishment license will be issued. However, time duration for grant of license vary from state to state.

Conclusion

 The final word suggests that you need to obtain the Shop and Establishment license before setting up any kind of your establishments. The Indian Government has launched this Act, keeping in mind that no business owner can violate this law and harass these employees who are on the office hierarchy.

For any assistance related to the Shops and Establishment Act, do reach us at Corpbiz.

Read our article:How to Obtain IEC Code in India

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Shalini Singh

Shalini is a B.tech graduate but her keen interest in writing impelled her to continue as a content writer. Further, She has a rich experience in Companies Act and Ammendment related topics.

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