Overview of Shop and Establishment License

Nowadays, in India, most of the businesses, such as the shops, restaurants, cafes, eateries, etc., are regulated and governed by the provisions of the Shop and Establishment Act, and hence, are mandatorily required to obtain Shop and Establishment License. However, it shall be pertinent to take into consideration that it is regulated by State Act, and the rules and regulations vary from one state to another state. Further, this act aims at providing proper and adequate working conditions to the laborers employed and also taking care of their wages, holidays, and many essential rights.
A Shop Establishment Certificate is required when an entity or a business starts employing people as full -time employees, casual workers, contract-based, etc., to regulate and administer the working conditions and also to ensure that their rights are protected. Moreover, it is also known as the Shop License informally.
Hence, the phrase “Shop and Establishment License” refers to a Certificate or License issued to the business, professions, and trade registered under the provisions Shop and Establishment Act. Further, it is noteworthy to note that all the rules and regulations of this Act are governed and administered by the Department of Labour.
Furthermore, this Department not only regulates the commercial establishments but also keeps an eye on the working of the charitable trusts, educational institutions, societies, and other premises like the insurance companies, banking, stock exchanges, share brokerages, etc.

What is the Meaning of Shop and Commercial Establishment?

“Shop” means any place where products or goods are sold, either by wholesale, retails, or services are furnished to customers. It consists of an office, go down, workplace, or a store-room, whether on the similar places or otherwise, used in association with such business or trade. However, a shop doesn’t comprise a commercial established or a factory.
“Commercial Established” means a place where any business, work, or any trade is undertake, which may comprise society, charitable or another Trust, printing establishments, and auditor establishments, educational institutes, places where the business of banking, shares, and insurance stocks, the brokerage is undertaken, eating houses, clubs theatres, and other places of public amusement or entertainment.
The Shop Establishment Registration is a registration based on State Shop and Establishment Act. The same is needed while starting a shop, hotel, eateries, or any other commercial place. Further, obtaining registration under the Shops and Establishment Act is necessary for every new shop or establishment.
Furthermore, one is required to obtain this license within a period of 30 days starting from the day of commencement of work. Lastly, the validity of a Shop Establishment License is for one year, and the same can be renewed every year. However, the rules and regulations concerning renewal vary from one state to another state. Know the complete difference between Trade license & shop & Establishment license.

Objectives of the Shop and Establishment Act

The following listed are the objectives annexed with the Shop and Establishment Act License:
The main aim behind the Shop and Establishment Registration is to protect the rights and to provide benefits to the employees working in an organized sector such as hotels, establishments, and restaurants along with in the unorganized sectors.
Additionally, the Shop and Establishment Registration aims at regulating and administering the day-to-day employees’ treatment and also to set better standards for employment.

Why is it Mandatory to obtain Shop and Establishment Registration in India?

Usually, for opening a current bank account in the name of the proposed business with the bank, people obtain registration under the Shop and Establishment Act.
Moreover, besides opening a bank account, it is more significant to have this license, or else the inspector inspecting the business premises may cause unnecessary problems for the said businessman.

Benefits of Shop and Establishment License

The advantages or benefits of the Shop and Establishment Registration is mentioned below:
Shop License provides Legal Acknowledgment to the particular shop or establishment.
It acts as an essential Registration for further registrations.
This license acts as a business proof. Hence, it helps in obtaining additional registrations in India.
Further, shops cannot open a bank account without a Shop and Establishment License. Hence a Shop and Establishment License is mandatory for opening a bank account in the name of shop or establishment.
Shop License helps in raising investments by way of Venture Capitals or Loans for the proposed business establishment.

Who are all eligible to obtain Shop and Establishment Registration in India?

The establishments that are required to obtain Shop and Establishment License are as follows:
Wholesalers or the Retailers’ shops and establishments.
Service Centres.
Store-rooms, Warehouses, and Godowns.
Also, any other working places.
Hotels,
Restaurants and Eateries.
Theatres, Amusement Parks, Entertainment, etc.

How to Ascertain Whether You Need to obtain a Shop and Establishment License or not?

The steps to ascertain whether an individual is required to obtain Shop and Establishment Registration or not is enumerated below:
The first and foremost step is to check and understand if the proposed business, which an individual is going to establish, is covered under the ambit of the term “shop” and “commercial establishment” defined under the Shop and Establishments Act.
If in case the same is covered, then he or she is required to abide by the norms and regulations prescribed by the Act for the treatment of their employees.
However, it shall be taken into consideration that the exclusions to the Act may vary from one state to another state. Now, check the particular state list of the Shop and Establishment Act, as every state has provided a list of the Shop and Establishments to be covered under the provisions of the Act. Further, such establishments are needed to run their business by adhering to the rules and regulations prescribed under the Shop and Establishment Act After that the concerned individual is required to file for the online registration under the said Act, within a period of 30 days starting from the date of commencement of the establishment.

What are the Key Aspects Governed by the Shop and establishment act?

There are various provisions prescribed by the Shop and Establishment Act, which regulate the key or critical aspects concerning the working of establishments and shops in India.
The key aspects that are regulated by the Shop and Establishment Act are:
Maximum Working Hours for the labours and employees.
Permissible time durations for having meals and rest.
Regulating Laws to forbid Child Labour in Factories.
Women Employment.
Number of compulsory weekly holidays offered to the employees.
Close or off days of the said establishments and shops.
Opening and Closing time of the establishments or shops.
Wages given to Employees for the Holidays.
Accidents Coverage Policies.
Preventive Measures against Fire.
Proper Lighting and Ventilation for workers.
Clean, hygienic, and sterile premises for the workers.
Conditions, provisions and timing for the payment calculation.
Regulations regarding the payment deductions.
Leave Policy.
Dismissal.
Proper maintenance of records containing employee details.
Note: More information concerning to the Shop and Establishment Act can be collected from the relative state government portal.

Essentials for obtaining Shop Establishment License in India

The Essentials for obtaining a shop & establishment license are as follows:
Name of both Employer and Manager.
Postal Address of the said Establishment.
Name of the Establishment.
Category of Establishment such as the restaurant, amusement park, hotel, etc.
The number of employees working.

Documents Required for Shop and Establishment License

The documents required for the registration under Shop and Establishment Act are as follows:
Employer’s identity proof in the form Aadhar Card, PAN (Permanent Account Number) Card, Driving License, Voter ID.
Employer’s passport-sized photograph.
Photo of the Establishment or Shop.
Copy of Rent Agreement or Lease Deed is required in case of rented property.
Any Utility Bill in the form of Electricity Bill, Water Tax Receipt of the working premises. However, the said utility bill should not be two months older.
Other documents needed as per the concerned business or establishment or business:
In the case of a Trust, a list of number of Trustees.
Memorandum of Association (MOA).
In the case of a Co-operative Society, a list of number of Members and Chairman.
Partnership deed with all the vital information regarding the firm’s name, name, and signature of all the partners along with the share percentage of each partner.
A copy of the permission granted by RBI (Reserve Bank of India).
A copy of the Certificate of Incorporation (COI) issued under the Companies Act, 2013.
A copy of the COR (Certificate of Registration) granted by the Charity Commissioner.
A Resolution showing the list of Designated Directors.
A Resolution concerning the commencement of the society’s business.
RTO Transportation Permit.
FSSAI license.
Drug license.
A copy of the permission granted by the collector.
NOC (No-Objection Certificate) issued by the Police Department for the opening of a Cybercafe.
IEC (Import Export Code) certificate.
NOC (No-Objection Certificate) issued by the Municipal Corporation for the opening of a Flour and Masala Mill.
Excise License required for the opening of a beer bar, restaurant or a wine shop.
A Certificate issued by the SEBI (Securities Exchange Board of India) to the Share Broker.
License issued by the Police Department for the opening of Security Services.

Procedure for Shop and Establishment License

The Procedure for obtaining a Shop and Establishment License is discussed below:

Download the Application Form
First and foremost step is to download the application form for the registration from the official website of the respective state in which the said shop or establishment is located.
Fill in all the Required Details
In the next step, the owner of the business is required to fill all the necessary details asked. The term necessary details include the following listed :
1. Name of the Proposed Shop and Establishment
2. Name and Details of the concerned employer
3. Name and Details of al the Employees working at that time
4. Address proof of the Registered Establishment together with the NOC (No-Objection Certificate) or the Rent Agreement, only in the case where the place is rented premises.
5. PAN card details of the concerned employer.
Submit the Application Form
Once the owner or the employer have fills all the required details accurately, then in the next step he or she needs to submit the said application form either to the Inspector in-charge or the Chief Inspector of the Shop and Establishment Act together with prescribed amount as fees.
Verification of the Application Submitted
After the submission, the application along with all the documents submitted will be verified and checked by the higher authorities.
Issuance of License
If in case, all the documents submitted along with the applications are in accordance to the requirements of the said act, then a certificate of registration shall be issued to the proposed shop or establishment.
Note: However, the process of obtaining registration might take around 15 to 20 working days in the major city areas. However, the same may vary from one state to another.

What are the Key Points to be Considered while Obtaining a Shop and Establishment License?

The things that must be taken into consideration while applying for the Shop and Establishment Registration are as follows:

The Inspector appointed can visit the registered premises for verification.
The Owner of the business is required to display the certificate of the Shop and Establishment Registration at a place easily accessible in the particular premises.
The License issued must be timely renewed prior to its expiry date.
If in case the owner wants to close his establishment, then he needs to notify the inspector in writing about the closure within 15 days of the closing.
Despite the Shop and Establishment License, the owner of the proposed business is also required to obtain prior approval from the respective state Department of Labour for the commencement of the business activities in that state.

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