The Shop and Establishment Act License

Shop and Establishment Act License ensures that every working employee gets his/her required benefits from the enterprise that they are providing their services. This Act protects the rights and benefits of each type of employee, such as full-time and part-time workers, contractual employees, ad-hoc members, temporary staff, etc.

It is mandatory for every organization, company or enterprise to get registered under Shop and Establishment Act to ensure that worker’s rights are secured and to regulate the working conditions. Shop and Establishment Act License is differently named in various states, such as Gumasta License, Gumastha License or Shop Act License.

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Who requires a Shop Act license?

• Business owners, individuals or entrepreneurs operating a shop, office or place to carry out any business activity
• Any business entity managing an office or any branch location to carry out any commercial activity

Features of Shop and Establishment Act

• The Shop and Establishment Act in India may vary from state to state regarding its structure, features, eligibility, fees, terms and conditions, etc.
• This license is required to be obtained within 30 days of commencement of business operations
• Banks require this license as a legal document before opening a business current account
• Besides processing plants that comes under Factory Act 1948, every other business entity whether it’s a shop, godown, office, warehouse, workhouse, customer centre, etc. falls under Shop and Establishment Act
• This license is required to be renewed periodically, as per state’s directives
• The Shop and Establishment License acts as a legal entity proof and offers the right to business to carry out business activity
• Business entities run by Government of India and State Governments are exempted to obtain The Shop and Establishment Act License

Shop Act License Fee

To obtain this license, applicants need to submit a nominal fee that varies according to the legal framework of state. License fee also depends on the business location and number of workers employed by the organization. More the number of employees, the higher is the license fee. However, the registration or license fee shall be decided by the labour office or the inspector in charge.

What Are The Documents Required For Shop And Establishment License?

• Passport-sized photographs of the owner
• Photograph of the owner along with his/her shop
• Applicant’s Identity proof, address proof along with PAN card
• Details of employees along with their wage rate and KYC documents
• Details of directors, partners and management staff
• Business address proof, lease deed, utility bills, etc.
• Incorporation certificate, and registrations and licenses, if any
• Company’s MoA & AoA or LLP Agreement of the Company

Commercial Establishments under Shop Act

• Banking and Financial Businesses, such as insurance, stocks exchange, loans, trading, etc.
• Cinema halls, theatres and entertainment places
• Contractors & auditors
• Hotels, restaurants, gyms, cafes and clubs
• Media and broadcasting houses
• Private educational institutions
• Quarries and mines, not included in the Mines Act 1952
• Registered or unregistered trusts (Charity/Non-charity)
• Society registered under SRA 1860
• Any other business related to entertainment

Key business activities controlled and regulated under The Shop and Establishment Act

• Basic hygiene
• Bonuses & festival gifts
• Eviction or sacking
• Holidays
• Incentives and perks
• Lighting and ventilation
• Long hours of work
• Opening and closing hours and timings
• Pay structure for women workers
• Precautionary measures against fire
• Provisions for rest and breaks
• Restriction of child labour
• Results from wages
• Vacation strategy
• Weekly holidays

Obtaining the Shop and Establishment Act opens the doorway of several benefits for individuals, SMEs and MSMEs, initiated by the Government of India in the last few years.

Know about more: What is the MSME loan for a new business?