How to Get a Shop Act License?

Starting a specific business can be exciting. However, it can also be scary if you do not know all the correct legal steps. One of the first licenses that every business in India must secure is the Shop Act License. This license stands out as proof that your business or commercial establishment is lawfully registered under the labour laws. Not possessing this license can lead to fines or other legal problems. This blog explains the Shop Act License, what it is, how to apply for it, what documents are needed, and why it is essential for every business or shop.

Understanding the Shop and Establishment Act in India

The Shop and Establishment Act is a state-specific legislation in the nation. It regulates the functions of commercial establishments and shops within their respective jurisdiction. The Act sets out its regulations and rules governing the incomes, working hours and other working conditions of people working in such establishments.

Even though every Indian state enacts its own version of this Act, the main provisions stay largely consistent across the country. The Act has been enforced and implemented by the Labour Department of every state.

The Applicability of the Shop and Establishment Act

Alternate Title: Which Businesses Are Eligible for the Shop Act License?

Every commercial business in India, which includes shops, eateries, cafes, and hotels, needs a Shop and Establishment Licence to operate. With many exceptions based on the number of workers, the nature of the activity and the type of establishment, the act applies to unregistered and registered establishments. Apart from that, this Act also applies to the following businesses:

Godowns and warehouses
Entertainment venues and theatres
Home-based offices and service-based businesses across various states.

The common factor is that the business has a defined physical location where consumer activities, services and trade take place. Even the eCommerce businesses that operate from premises typically have to comply. The Act needs to be observed within 30 days of starting the operations, or you might face penalties.

Regulations Under the Shop and Establishment Act

Under the Shop and Establishment Licence, the Indian government lays down rules for workers and businesses. Some of the primary regulations include the following:

Hours of work, weekly holidays and yearly leave.
Payment of compensations and incomes.
Prohibition of child labour and unsafe working conditions for women.
Prohibition of employing women and young individuals on the night shift.
Inspection and enforcement
Interval for rest
Closing and opening hours of the business
Employers must maintain proper records on working hours, leave and income details.
Dismissal provisions.

All these regulations ensure a fair and secure workplace. They make things easier for inspectors to check the labour compliance.

How to Get a Shop Act License?

Alternate Title: How to Obtain the Shop Act License for Your Business?

To obtain the Shop & Establishment Registration Certificate or license, you have to get it done online. The process of acquiring this certificate can differ greatly from one Indian state to another. To get the certificate, the owner or proprietor of the shop must follow these steps:

Online Process:

Step 1: Visit your state’s State Labour Department portal and log in.
Step 2: Fill the application form for registration under the Shop and Establishment Act.
Step 3: Upload all the necessary documents and pay the prescribed fees. (The prescribed fees might differ from one state to another. Check the fees in your state before making the payment.)
Step 4: When the registration form gets approved, the Shop & Establishment Registration Certificate gets issued online to the owner/proprietor of the business.

Offline Process:

Step 1: Fill out the application for registration under the Shop and Establishment Act.
Step 2: Submit the application to the Chief Inspector of the concerned location.
Step 3: Pay the prescribed fee for the registration.
Step 4: The Chief Inspector issues the Shop & Establishment Registration Certificate to the proprietor/owner after being completely satisfied with the correctness of the application.

The application form contains information about the establishment and the employer. It also contains the establishment's category, address, number of workers and other relevant information as needed.

Documents Needed for the Shop Act Registration Online

To gain success in obtaining the license for Shop Act Registration Online, you need to provide all the essential documents. Here are the documents that you need to submit:

The address proof, such as a lease deed, property tax receipt, utility bill or an NOC from the owner of the business establishment or shop.
Identification proof, such as Voter ID, PAN Card, Aadhaar Card or Passport of the company or proprietor.
AOA and MOA of the establishment (if the applicant is a company).
PAN Card of the company or proprietor/
Details of the employees.
Payment challan
Extra necessary business licenses (if any).

The authority or department might request you to provide other documents if it is needed. You should always inspect the checklist of the local labour department before you apply for the Shop Act Registration Online or offline.

What is the Validity of the Shop and Establishment License?

Alternate Title: How Long Does the Shop Act Licence Stay Valid?

The validity of the Shop Licence Registration Certificate differs greatly from state to state. Many of the states offer a Certificate that is valid for a lifetime, but other states offer a Certificate that stays valid for 1 to 5 years.

The registration applications should be renewed right before the expiry of the registration period. The Shop Licence Registration Certificate is an essential license that is needed by commercial establishments and shops in the country. It is a mandatory compliance that should be followed by all businesses. Even though the Shop and Establishment Act differs greatly from one state to another, it ensures labour protection.

Wrapping Up

Securing the Shop Licence Registration Certificate is a fundamental step for every business. It proves that your establishment or business is compliant and recognised by the labour law and is qualified for other government services and registrations, such as GST and banking. Missing out on this license can lead to operational setbacks, legal notices and even fines.

All these things might sound overwhelming, but taking the help of companies like First Startup can make things a lot easier. It is a professional business compliance firm that aids entrepreneurs in completing licenses and registrations with ease. They also have a team of qualified experts who are skilled enough to handle the tracking, application filling and documentation so that you do not get stuck in the legal red tape.

Whether you plan on launching a small shop or want to expand to various locations, First Startup can take care of the Shop Act Registration and other important business needs. With their support, you can keep the focus on growing the business without experiencing any compliance stress.

FAQs

Is it possible for a freelancer to apply for the Shop Act License?

Yes. Freelancers who are operating from a home or commercial office can also apply for the license. This may depend on their respective state government rules.

Is the Shop Act License needed for online businesses?

When the business operates from a registered premises, many Indian states might need this license regardless of its online nature.

Can the license be amended after the registration?

Yes. Information like ownership changes, employee count or address can be easily updated via the state’s labour portal.

What happens if a business does not acquire the license?

Authorities might impose financial penalties, restrict operations or issue notices till the registration is completed.

Is a license needed for the bank account opening?

Many banks do ask for this license as proof of the business's existence while opening the current account.