Overview of Shop and Establishment License
Most of the businesses in India, including shops, restaurants, cafes, etc., are regulated under the provisions of the Shop and Establishment Act. To regulate the work environment and to ensure the rights of the workers are being protected, it is mandatory to get your business registered under the Shop and Establishments Act. However, the rules and regulations vary from state to state in; which the Act aims at providing proper working conditions to the labourers and taking care of their holidays, wages, and rights.
As per the Act, the establishment includes shops, commercial establishments, residential hotels, restraint, eating houses, theatres, or other places of public entertainment and also those establishments as notified by the State government in the official gazette.
A shop means any place or premises where goods are sold and services rendered to customers. It includes store-rooms, go-downs, warehouses or workplaces other than a factory, commercial establishment or other places used for public amusement and entertainment. The License is issued to the following establishments: -
- Professions registered under the Shop and Establishment Act.
Eligibility to Obtain a Shop and Establishment License in India
- Wholesalers or the retailer's shops and establishments
- Service Centres
- Warehouses, Storerooms, and go-downs
- Additionally, any other working places
- Eateries and restaurants
- Entertainment houses, Amusement parks, Theatres, etc.Bottom of Form
Benefits of Obtaining Shop and Establishment License
- Legal Recognition
the Shops and Establishment license provides legal recognition to the respective establishment/shop.
- Acts As a Business Proof
For further business registrations in India, the Shops and Establishment license acts as a business proof.
- Helpful In Opening the Bank Accounts and Other Formalities
The registration of Shops and Establishments becomes necessary for reasons like opening a bank account in the name of an establishment/shop.
- Provides A Platform for Raising New Investment
The Shops and Establishment license helps the proposed entrepreneur in raising investments through loans or venture capital for the proposed business establishment.
- Avails The Government Benefits
By getting the shop and establishment license, the entrepreneur can avail of the government benefits in a different stage of business.
- Saves Time
As the process of shop act registration has turned online, it saves time in the registration procedure as well as creates less hectic while in operation.
Documents required for obtaining the Shop and Establishment License
Below-mentioned documents are required for Shop and Establishment License-
- Id proof such as Aadhar card/PAN card/ voter identification card/ driving license of the employer.
- Passport size photograph of the employer
- The Affidavit, Cancelled cheque, and Bank statement,
- A photo of the establishment/ shop along with the employer
- In the case of rented property, a copy of the rent agreement
- Any utility bill of the working premises.
Other Documents Required as Per the Establishment or Business Entity
- In the case of a trust, a list of the number of trustees
- Certificate of incorporation, MOA, and AOA as per the Companies Act,
- In the case of co-operative societies, a list of the number of members and chairman
- Partnership deed with all the important information such as the name of the partners along with their signature and share percentage of partners.
Registration Procedure of Shop and Establishment License
Physical Registration Procedure: - Any commercial establishment/shop has to apply for the License to the chief inspector of the respective area within 30 days of commencement of business activities. It is applied through a prescribed form that requires some important information, such as-
- The name of the respective employee,
- Name and address of the establishment,
- Number of employees in the establishment, and
- The category of the proposed establishment and some other details vary from one state to another.
Once applied is reviewed by the inspector, then in the next step license is provided to the establishment. The Shop and Establishment License must be displayed at the premises and should be renewed at the prescribed time. Additionally, it is mandatory to obtain the Shop and Establishment License for all business entities, even if they are working from home.
Note-As per the Act, any establishment or Shop in case of closing down the business has to notify the chief inspector in writing before 15 days of closing. The chief inspector further cancels the registration certificate of the establishment or Shop by removing it from the register.
Online Procedure for Obtaining a Shop and Establishment License
- Visit The Website
First of all, an applicant needs to visit the Labour Department website of the respective state (as applicable) and create the user ID and password through the same link.
- Fill In the Requisite Details to Create the Profile
Below mentioned details are required-
- Name of the proposed establishment/shop
- Name and details of the employer
- Name and details of the employees at that time
- Registered establishment address along with NOC or rent agreement (only for rented premises)
- PAN card details of the employer
- Form A
Click on Shop and Establishment Registration Form A.
- Fill In the Requisite Details
Select the state and district of your shop or establishment and fill in the requisite details asked in the form.
- Upload Documents
Once the form is filled, click on the Upload documents, and attach the requisite documents.
After uploading all the documents, click on the fees button and make the payment.
- Checking The Status
An applicant can check the status on the under-scrutiny option.
- Issuance Of the License
If all the documents are as per the requirements of the act, the certificate shall be issued to the proposed establishment/shop.
Note: However, in the case of Physical form Submission, it might take around 15-20 working days for the physical verification and issuance of registration certificate in the major city areas. However, it may vary from one state to another.
Penalties for Shop and Establishment Act
It is compulsory for the entire establishment under the Act to obtain Shop and Establishment registration and comply with all the rules and regulations prescribed under the Act.
However, in case of any failure in getting registration and following the rules and regulations of the Act, the establishment would be liable to pay the penalty. The amount of penalty would vary from state to state.
Aspects Regulated as per the Provisions of the Shop and Establishments Act
The Shop and Establishment Act has made various provisions to regulate the aspects relating to the working of shops and establishments in India. Following are Some Key Aspects Regulated by them: -
- Maximum working hours of the employees/ labours
- Time duration allotted for meals and rest
- Regulating laws to prohibit child labour in factories and other establishments
- Women employment
- Number of compulsory weekly holidays provided to the employees
- Close/off days of the establishments/shops
- Opening and closing hours of the establishments/shops
- Wages to employees for the holidays
- Accident’s coverage policies
- 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
- Employee’s proper record keeping
Note: More information related to the Shop and Establishment Act can be gathered on the relative state government portal.
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Frequently Asked Questions
Yes, under the Shop and Establishment Act, every business has to seek approval from the Department of Labor before commencing the business.
- A register containing all details of employment
- Any deduction from salary
- Advances issued
- Any fine applied
- Salary details
- Holidays awarded
Files related to annual holidays and the number of employees needs to be submitted to the office of the Municipal Corporation annually.
Every shop and establishment needs to register itself compulsorily under this Act within 30 days of commencement of work. As this is such a basic license, many other licenses require this as proof of a commercial business. For example, most banks will require you to furnish it if you want to open a current account.
- To protect the rights and satisfaction of the laborers working in the organized sector such as establishments, hotels, and restaurants as well as in the unorganized sectors.
- Additionally, it regulates the wages, holidays, incentives, etc. to set better standards for the working conditions of the employees.
It is mandatory for all shops and establishments, whether employing more than one employee or more, to apply for registration under the Act within 30 days of commencement of business.
- Working hours.
- Leave taken by the employee,
- Leave with wages,
- The certificate should be displayed at a notable place within the shop.
- Renewal of certificate before the expiration date.
- Any alteration or updating should be informed to the chief labor inspector.
- Any person who indulges in behavior restricted under the actwould be liable to punishment under the law.
The fundamental object behind The Shops and Establishment Act,is to make sure all employees in the establishment are given equal rights and benefits in all foundations.
- Establishment is the act of establishing; an approval or inducing; settlement; confirmation while,
- Shop is an establishment that sells goods or services to the public, originally a physical location, but now a virtual establishment as well.