Complete Guide to the Shop and Establishment Act, Registration, and Licence

India is a country where self-employment is encouraged as a tool to get rid of unemployment. Anyone in India who is 18 years and above can establish and run their own business.

India ranks 63rd in the Ease of doing business index in 2020. This index measures factors such as ease of starting a business, permits, licenses, and permissions, getting electricity, registering property and business, etc. This also measures how conducive the environment in the country is for running a business. 

This is one of the reasons why there is an entrepreneurial wave happening across our country. Everyone wants to set up their own business. While it is easy to do so if we have an idea and the necessary funding, there are some rules to be followed.

When starting a new business, the first step is to register it with the respective state 

government through the Shop and Establishment act.

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Are you looking to start your own business? Then, keep reading to know how to register your establishment with your state government.

What is the Shop and Establishment Act in India?

The shop and establishment act is introduced by the department of labor to regulate the various actions of a newly established business. anyone starting a new business should register themselves under the act. The act was introduced by the government of India but some rules may vary for different states. All shops and establishments for commercial purposes come under the act. You will have to register your new business under this if you are starting either of the following establishments-

• Wholesale/ retail store
• Office
• Restaurant
• Hotel
• Theatre
• A Showroom
• A godown

However, factories and production units do not come under this act and there is a separate act for the same.

Why is the Shop and Establishment act established?

The shop and establishment act was established mainly to safeguard the interest of the employees by regulating various aspects such as the working conditions, working hours, maternity leaves, weekly holidays, payment of wages, terms of service, etc. 

Labour is an important part of any business. The shop and establishment act looks to provide fair wages and good working conditions for the employees of any business. This act prevents the misuse and exploitation of the working class in the hands of the business owners.

What are the features of the Shop and Establishment Act of India?

It is compulsory by law for all new shops and business establishments to register themselves under the Shop and Establishment Act of India.

Here are some points to explain the features of the Shop and Establishment act-

• All new shops and establishments have to register under the act within 30 days of commencing business
• The Shop establishment act certificate is valid for up to a year and requires annual renewal, preferably 15 days before the date of expiry
• The business should maintain all necessary records and registers including new notices if any.
• The documents should mention in detail regarding the minimum wages
• The business owner should also mention the hours of work per day and working days per week and provisions regarding national and public holidays
• The document should mention the rules for employing young children or women and their terms of service
• Provisions regarding paid leave, annual leave, sick leaves, or maternity leave should be mentioned in detail
• The business owner needs to communicate the closure of the business within 15 days of the last working day.

What are the documents required for Shop and Establishment Registration in India?

When starting a new business, we need to apply for the shop establishment act certificate from the state government. To register the business, we should visit the local labor department within 30 days of the commencement of the new business. The Shop act license documents required are-

• Certification of Incorporation
• PAN card copy of the business owner
• Photo of the front view of the business establishment with the name displayed in the local language
• Proof of address of the establishment (Preferably the lease/ rent agreement of the business property)
• Copy of consent from business partners or board resolution
• List of all partners in the business along with their ID and address proof
• List of current employees

All the above documents should be submitted along with a small processing fee, which is different for different states. We can also apply for the license online using the state government’s official website. Once the labor office receives the application, the labor inspector will pay a visit to the business premises to check the authenticity of the information provided. He will then issue the certificate per the law. 

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What is the procedure for the renewal of the Shop and Establishment act certificate?

Every business owner should renew The shop and establishment license every year. The procedure for the same is quite simple. We can renew the application online through the respective state government’s website. The shop act license documents required for the same are-

• PAN card copy of the Owner/ Partners/ Directors
• Scanned passport-sized photo of the Owner/partners/ directors
• Rental/ Lease agreement of the property of the business establishment
• Number of employees
• Name of establishment
• All registers maintained to date. 

We should remember that the license should be renewed 15 before the expiry date. After payment of a fee is completed, the license will be renewed within a week.

What are the advantages of Shop Establishment act registration in India?

The Indian Constitution makes it mandatory for all new businesses and establishments to register themselves under the act. This also comes with its own set of advantages such as-

• It is easier for the owner to open a current account in a bank to conduct all business transactions.
• The legal formalities in case of any labor-related complaints regarding the business are smooth when it is registered under the act.
• Surprise visits from the labor inspector will not be too worrisome.

Conclusion-

The shop and Establishment act registration is a way of building a strong foundation of healthy labor practices. These rules and regulations are introduced to safeguard the interest of both the employee as well as the employer. Therefore, we must take advantage of this and register any new business or establishment under the act.

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