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. However, the rules and regulations vary from state to state, the act aims at providing proper working conditions to the labors and taking care of their holiday’s, wages and rights.
Go through the step by step guide to obtain shop and establishment license along with its importance, features, and compliances.
What is Shop and Establishment License Act?
The Shop and Establishment License is issued to the business, trade, professions registered under the Shop and Establishment Act. Further, all the rules and regulations of the Act are governed by the Department of Labor that not only regulates commercial establishments but also keep a check on the working of charitable trusts, societies, educational institutes and other premises such as banking, stock exchanges, insurance companies, share brokerages, etc.
Both organized and unorganized sectors are regulated under this act that makes sure appropriate working conditions are provided to the labors. The rules and regulations formed under this Act vary from state to state but the primary goal remains the same. Therefore, the establishment that has to obtain the license has to file an online application concerning his state official portal.
Who can obtain shop and Establishment License in India?
- Wholesalers or the retailer's shops and establishments
- Service Centers
- Warehouses, Store-rooms, and Godowns
- Additionally, any other working places
- Eateries and restaurants
- Entertainment houses, Amusement parks, Theaters, etc.
Benefits of obtaining Shop and Establishment License
- Provides legal recognition to the respective establishment/shop
- It is a basic license that can prove helpful in further registrations
- Work as a business proof when you apply for further registrations in India
- The registration becomes mandatory for reasons like opening a bank account in the name of establishment/shop
- Helpful in raising investments through loans or venture capitals for the proposed business establishment
Documents for obtaining the 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
- A photo of establishment/ shop along with the employer
- In 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 case of a trust, a list of number of trustees
- Memorandum of Association
- In the case of co-operative societies, a list of number of members and chairman
- Address Proof
- Partnership deed with all the important information such as company name, name, and signature of the respective partner and share percentage of partners
- A copy of RBI permission
- Certificate of incorporation as per the Companies Act
- A copy of the certificate of registration issued by the charity commissioner
- A resolution showing the nomination and list of designated directors
- A resolution regarding the commencement of the business of society
- RTO Transportation Permit
- Food or FSSAI license
- Food and drug license
- A copy of the collector permission
- NOC by the respective police department for a Cybercafe
- IEC certificate
- NOC from the municipal corporation for opening a masala and flour mill
- Excise license for opening a beer bar, restaurant or wine shop
- A certificate issued to the share broker by SEBI
- License issued by the police department for opening security services
What are the objectives behind the Shop and Establishment License in India?
- The chief objective behind the registration is to safeguard the rights and provide benefits to the employees working in 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.
What are the aspects regulated as per the provisions of Shop and establishment act?
The shop and establishment Act has made various provisions to regulate the aspects relating to the working of shops and establishment in India.
Following are some key aspects regulated by them:
- Maximum working hours of the employees/ labors
- Time durations allotted for meals and rest
- Regulating laws to prohibit child labor 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
- Accidents 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.
How to know whether you are eligible for Shop and Establishment License or not?
Eligibility is the main concern while you are thinking to get registered under the Shop and Establishment Act.
Following are the things you should check:
- The foremost thing is to check whether the establishment or shop you are going to invest in is covered under the Shop and Establishment Act or not.
- If yes, read carefully all the rules and regulations of the act set for the employees of the proposed sector.
- Exceptions relating to the rules and regulations may vary from one state to another. Make sure to check the state list where the business is being established. Once you have gone through the list properly the next step is to file for the online application of Shop and Establishment Act within 30 days of establishing the business.
Registration Procedure of Shop and Establishment License
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 establishment, number of employees in the establishment and category of the proposed establishment and some other details varying 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.
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.
Additionally, it is mandatory to obtain the Shop and Establishment License for all the business entities even if they are working from home.
Registration Procedure for obtaining a license
- Download the application
First of all, download the registration application from the respective states official website in which your shop or establishment is located.
- Fill the required details
- 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
- Submit the Application
Once you have filled all the details accurately submit it to the chief inspector or inspector in charge of the shop and establishment act along with prescribed fees amount.
- Verification of the Application
After submission, all the documents and the application would be verified by the higher authorities.
- 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
Notes: 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.
Consideration while applying for a Shop and Establishment License
- The inspector can visit for verification of the registered premises.
- Display the shop and establishment registration certificate at an easily accessible place in the respective premises.
- The license should be renewed from time to time before its expiry date.
- Notify the inspector in writing in case of closing the establishment within 15 days of the closure.
- Despite the shop and establishment license, you also have to get the approval from respective states' department of labor for commencing the business activities in that state.
How will Corpbiz help you?
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 number of employees need 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.