Shop and Establishment Act Registration

Shop and Establishment Act Registration
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In India, the Shop and Establishment Act was introduced to monitor/regulate work conditions & to protect the employees’ right in an unorganised sector of employment under the Indian Labor Law. The Shop and Establishment Act Registration is compulsory for all types of food businesses in India be it a food truck or a fine dining restaurant. Generally, shops are defined under the Shop and Establishment Act as the premises where the products selling take place either by retail or wholesale or where services are provided to customers. It comprises offices, storerooms, warehouses & godowns used in association with the trade or business.

Commercial establishments under the Act are defined as a commercial, trading, banking, or insurance establishment or administrative services in which individuals are employed for office work. It comprises a hotel, eating house, theatre, restaurant, café, or other public entertainment or amusement places. However, industries & factories are not covered by the Shop and Establishment Act & are regulated by the Factories Act, 1948 and Industries (Development & Regulation) Act, 1951. The Shop and Establishment Act Registration Certificate or License acts as a Basic Registration or Licence for the business. The Shop and Establishment Act Registration Certificate is produced for getting many other business Licences & Registrations. It serves as incorporation proof of commercial shops or establishments. It is useful when the business owner wants to get a loan or open a current bank account for the business. Most banks will ask for the Shop and Establishment Act Registration Certificate for opening a current bank account.

What are the various regulations under the Shop and Establishment Act?

Following are the regulations under the Shop and Establishment Act:

  1. Inspection & Enforcement;
  2. Record keeping by the employers;
  3. Prohibition of employment of children;
  4. Dismissal Provisions;
  5. Working hours, annual leave, weekly holidays;
  6. Interval for rest;
  7. Prohibition of employing women & young individuals in the night shift;
  8. Payment of wages & compensation;
  9. Opening & closing hours.

Importance of Shop and Establishment Act License

  1. To stop child labour;
  2. To convert unorganised sector into organised;
  3. To impose rules based on local culture & empower states;
  4. To regulate employees’ wages;
  5. Maintain a healthy working environment.

Which entities have to register under the Shop and Establishment Act?

Following is the list of entities that can apply for Shop and Establishment Act Registration:

  1. Wholesale and Retail Shops;
  2. Restaurant or eating house;
  3. Residential hotels;
  4. Warehouse, godown, or storeroom;
  5. Theatre or amusement or place of public entertainment;
  6. Workhouse or workplace used for trade/business;
  7. Premises where services are provide to customers including offices;
  8. Commercial establishment.

Advantages of Shop and Establishment Act Registration

Following is the list of benefits that you can avail after getting Shop and Establishment Act Registration:

  1. Provides Legal Protection: This Licence provides legal protection to the business and its employees. It also ensures that the business is following all the labour laws and regulations, and protects employees from exploitation & unfair treatment.
  2. Avoid unethical business practice: Child labour is very common in the unorganized sector. Despite a law prohibiting such activities, adolescents can be found working in a number of industries for extremely low rates from a café to a fabrication industry. The Shop & Establishment Act includes some strong anti-child labour regulations.
  3. Business Expansion: Essentially, an owner of the business who devotes 100% to the Shop Act’s requirements will be able to enjoy unanticipated rewards in the long term. The Shop and Establishment Act gives an entity or a company a legal status, allowing the business owner to have better exposure to a neglected part of the market over time.
  4. Avail Government Schemes and Subsidies: Many Government subsidies & schemes are available only to businesses that have a valid Shop & Establishment License. Businesses that have Shop & Establishment Act License can take benefit of these subsidies & schemes to lessen their operating costs & grow their business.
  5. Ease of opening Current bank account of the business: As per RBI regulations, every business must have a separate business account to manage its money. Under the Act, only a Shop and Establishment Act Registration Certificate can be used to create this business account.

Documents Required for Shop and Establishment Act Registration

Following is the list of all the documents required for Shop and Establishment Act Registration:

  1. Identity proof of the Proprietor;
  2. PAN Card of the Proprietor;
  3. Address proof of the shop or business establishment;
  4. Employees’ details;
  5. Payment challan;
  6. Additional business licences vital for commencing the business.

Procedure for Shop and Establishment Act Registration

The complete process for getting the Shop and Establishment Registration Certificate differs from state to state and it can be obtained offline or online.

  • For getting the Shop and Establishment Act Registration Certificate online, the owner/proprietor of the shop or business must log into the website of the respective State Labour Department.
  • The owner/proprietor must fill the application for the Shop and Establishment Act Registration, upload the documents & pay the prescribed fees, also the prescribed fees differ from state to state.
  • Once the application form for the Registration is approved, the Shop and Establishment Act Registration Certificate will be issued online to the business owner or proprietor.
  • For obtaining the Certificate offline, the application is to be filled & submitted to the Chief Inspector of the concerned area along with the fees. Then, the Chief Inspector will issue the Certificate to the business owner after being satisfied with the correctness of the application.
  • The application form contains the information related to the employer’s name & establishment, complete address & category of the establishment, no. of employees & other vital details as needed.
  • The application needs to be renewed before the expiry of the Registration Certificate.

Note: The validity of the Shop and Establishment Registration Certificate differs from state to state and some states provide the Registration Certificate valid for a lifetime, while other states provide the Registration Certificate valid for 1 to 5 years.

Penalties for not obtaining Shop and Establishment License in India

Under the Shop & Establishment Act, penalties vary by state & are generally monetary, imprisonment, or operational-based. Although the monetary value is high, the risk of a closure notice hangs over various non-compliances.

Why Taxneu?

No matter where you live, Taxneu can help you with registering your business. No doubt getting a Shop & Establishment License needs multiple professionals’ input. Taxneu can make the whole Shop and Establishment Act Registration process simple & hassle-free. Our professionals can help you with all the Shop and Establishment Act Registration process & have years of experience in obtaining Shop and Establishment Act Registration Certificate.

FAQs

  1. What is the shop and establishment act?

The shop and establishment act is a state-specific law that governs the working conditions, safety standards, and business registration requirements for shops, commercial establishments, and service providers.

  1. Who needs to register under the shop and establishment act?

Registration under the shop and establishment act is required for all establishments involved in commercial activities, such as shops, hotels, restaurants, theatres, and offices.

  1. What are the benefits of registering under the shop and establishment act?

By registering under the act, you can demonstrate compliance with legal requirements, protect the rights of your employees, and avail various social security benefits for your workforce.

  1. How do I register under the shop and establishment act?

To register, you need to submit an application with the prescribed fees and required documents to the respective state’s labour department or the online portal, if available.

  1. What documents are required for shop and establishment act registration?

The commonly required documents include identity proof, address proof, ownership proof or rental agreement, details of employees, and other relevant business documents.

  1. Is it mandatory to display the registration certificate?

Yes, it is mandatory to display the registration certificate prominently at your establishment where it can be easily seen by employees and customers.

  1. What is the validity period of the shop and establishment registration certificate?

The validity of the registration certificate varies from state to state, typically ranging from 1 to 5 years. After it expires, it needs to be renewed.

  1. What is the penalty for non-compliance with the shop and establishment act?

The penalty for non-compliance may include fines, imprisonment, or even closure of the business in severe cases, depending on the severity of the offence and the respective state laws.

  1. Can I make changes in my registration details after obtaining the certificate?

Yes, you can make changes in your registration details by submitting an application for amendment to the labour department within the specified time frame.

  1. Do I need to maintain any registers or records under the shop and establishment act?

Yes, you are required to maintain registers and records related to attendance, wages, leave, holidays, and other relevant details of your employees.

  1. Am I required to provide employee benefits like leaves and holidays?

Yes, the shop and establishment act mandates that certain employee benefits, such as weekly offs, annual leave, maternity leave, etc., should be provided as per the state-specific rules.

  1. What are the working hours prescribed under the shop and establishment act?

The working hours and weekly offs prescribed under the act may vary by state, but in general, establishments are required to adhere to a maximum limit of working hours per day and provide employees with weekly rest periods.

  1. Do I need to renew my registration every year?

The renewal period varies from state to state. Some states require annual renewal, while others may have longer renewal periods such as once in three or five years.

  1. Can I transfer my shop and establishment registration to another owner?

Yes, you can transfer your registration to another owner in case of a change in ownership. It is necessary to inform the labour department and follow the prescribed procedure for transfer.

  1. Is there any provision for online registration under the shop and establishment act?

Many states have introduced online registration portals to simplify the registration process. You can check the respective state’s labour department website for more information.

  1. What are the consequences of operating without a valid shop and establishment registration?

Operating without a valid registration certificate can lead to legal consequences, including hefty fines, penalties, closure of the business, and other legal liabilities.

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