Is the Shop Act Mandatory in India?

Define Shop Act License?

We need a Shop Act licence in order to properly conduct business there. In India, the “Shop Act” licence is required.

The Shop and Establishment Act is passed by the state and differs slightly from state to state in India. However, the relevant Shop & Establishments Act of each state, as defined in the Act, provides protection for all stores and commercial establishments operating within that state.

For instance, in the native language of Maharashtra, the Shop and Establishment Act is also known as Gumasta. All shops must register in accordance with this Act.

The Shop Act’s goals are to:

  • Regulation of working conditions and employment conditions in shops, commercial establishments, hotels, restaurants, eating establishments, theatres, and other public entertainment venues are provided to employees and proprietors in the unorganised sector of employment, such as shops and establishments.

What Is the Purpose of this License?

To guarantee that workers’ rights are upheld and working conditions are controlled, businesses that hire contract workers, full-time employees, casual workers, and so on must register under the Shops and Establishments Act, generally known as the Shop License.

For a Shop Act license, the following documents are required:

  • the Aadhar card of the employer (in case of a legal statute such as enterprise, etc. copy of the Aadhar card of the responsible individual under the respective Act)
  • Actual image of the business, displaying the inside and the name board in Marathi in the proper place.
  • Deed of LLP/Partnership A registration certificate is necessary in the case of a partnership or limited liability company.
  • The company’s certificate of formation, a list of directors on letterhead with their names and addresses, and a resolution proposing new directors (in the case of a private ltd or limited company)
  • a picture of the candidate
  • The applicant’s signature
  • Verifying addresses
  • PAN card for your most recent electric bill (company PAN in the case of private ltd, partnership, limited firm or Proprietor PAN in the event of a sole proprietorship)
  • Self-declaration.
  • UID for the building (if sites are to be found in Mumbai).

The following is the method for obtaining a license:

  • The document needs an advisory.
  • The report’s suggested action
  • creation of a document list and the preparation of papers in accordance with the application
  • completing the application
  • The department will carry out an inspection if necessary.
  • Office of Liaison
  • A permit has been granted.
  • yearly compliance, if necessary
  • when a renewal is due. 

Who Is Authorised to Grant a Shop Act License?

Corporation of the municipality

What Is the Shop and Establishment License’s Purpose?

Workers in the unorganised sector do not have a regulating system to guarantee that their rights and working conditions are appropriate. The Shop Act licence was established for this reason. Despite the fact that the laws differ from state to state, the Shop or Trade License preserves a certain amount of consistency within a specific area in terms of vacations provided, working hours, and pay, among other things.

Businesses that conduct any kind of trade are subject to the Shop and Establishment Act’s regulations. This rule applies to all establishments that perform stock, insurance, or brokerage transactions, including for-profit educational institutions, charity trusts, and other commercial enterprises.

The Shop and Establishments Act governs employee break times, open and close times, sick, maternity, and unpaid leaves, as well as restrictions on overtime labour, national and religious holidays, and other things.

Who Is the Shop and Establishment Act Intended to Protect?

Any venue where people can purchase, sell, or receive services in addition to retail or wholesale items is referred to as a store. The following establishments are covered by the Shop and Establishments Act: 

  • Storerooms
  • restaurants or other eating places
  • Workhouses, 
  • warehouses, 
  • theatres, and other places where the public can enjoy entertainment
  • Hotels for locals.

What Is the Procedure for Obtaining a Shop and Establishment License?

Please complete the application form and send it together with the necessary paperwork. You’ll get a stamped challan after covering the necessary fees. To the chief inspector of the concerned area, send the application form and challan.

The form will then be reviewed by the chief inspector, following which the establishment will be approved and receive a registration certificate. Usually, it takes a week to finish this. The registration certificate must always be visible to customers in the establishment or store, and the Indian government mandates that it be renewed when it expires.

Of course, the Act’s statutory requirements must all be satisfied in order for the licence to be granted. To check that all rules have been observed, the inspector may visit the institution at any time. If not, the establishment will likely be punished.

Let’s say someone wants to shut down a business since there isn’t enough business. The owner is then required to write the chief inspector within 15 days of the closure, outlining the issues discovered and the decision to close the business as a result. The chief inspector will reject the registration certificate after reading the owner’s letter, removing the store or organisation from the official registry.

What Is the Cost of Registering for a Shop Act License?

According to the Shop Act website, whether you’re looking to register your shop/business or renew its licence, the fees you’ll have to pay depend on how many employees you have.

A registration for shop and establishment and renewal cost of about 6,000 and a late fee of about 3,000 are required of businesses with more than 100 employees. However, more often than not, the type of business you run—rather than the amount of employees you have—determines your cost structure. For instance, the cost to apply for and renew a store licence may vary, according to the Madhya Pradesh government website.

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