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Shops and Establishment

Applicability of Shop and Establishment Act

The registration of a shop or establishment is required for various reasons, including the opening of a bank account. This is a basic license that serves as proof of business activity and is mandatory in India to operate a business.


Most businesses in India are governed by the Shop and Establishment registration Act, which is adopted by each state’s legislation. The Act’s main goal is to regulate the payment of wages, holidays, terms of service, leaves, hours of work, work conditions, overtime work, maternity leave and benefits, description of labour, rules for child employment, and so on for those who work in shops and commercial establishments such as hotels, theaters, restaurants, bakeries, charitable trusts, societies, educational institutions, eating houses, and business premises such as brokerage/broadcasting houses. Lets see about applicability of shops and establishment act in this article.

Within 30 days of starting work, all of the specified places of employment must register under the Shop and Establishment Act. Factories are covered under the Factories Act, 1948, instead of the Shop and Establishment Act.

Need for Shop & Establishment Registration

Within 30 days of starting employment, each business that fits under the category of a commercial shop and establishment must register under the Shop and Establishment Act. The Act grants shop and establishment registration, which certifies the hours of work, wage payment, holidays and leaves, terms of service, and other work conditions of persons employed in commercial establishments, shops, establishments for public entertainment or amusement, and any other establishments.

For the business to continue, the shop and establishment license must be registered. Every state has its own shop and establishment laws. The functioning business must obtain shop and establishment registration in accordance with the procedures outlined in state shop and establishment law. Different states have different names for the shop and establishment registration laws. For example, it is known as the Gumasta License in Maharashtra, the Trade License in Bihar, and the Shop and Establishment License in Uttar Pradesh, Delhi and Haryana.

Regulations Made Under the Act

Despite the fact that each state has its own shop and establishment laws, the rules set forth by these laws are relatively similar. The following are some of the regulations enacted under the Shop and

Establishment Act:

  • Working hours of work in a day and week
  • Interval for meals and rest
  • Prohibition for employment of children
  • Employment of young persons or women
  • Opening and closing hours, closed days, overtime work
  • Weekly holiday, wages for holidays, national and religious holidays,
  • Deductions made from wages
  • Time and condition, payment of wages, dismissal from employment
  • Cleanliness, lighting and ventilation
  • Fire safety and precautions, accidents,
  • Spread-over, rest interval
  • Maternity leave, Annual leave, sickness and casual leave, other leave policy
  • Employment and termination of service
  • Maintenance of registers, record keeping and display of notices
  • Obligations of employers as well as employees.

Applicability of Ahops and Establishment Act

Despite the fact that this is a basic license, it must be registered as proof of a functioning business company. If the owner wants to open a current account, most banks require a copy of the registration certificate. The PAN card of the business owner or the business itself, a copy of the rental agreement or sale document, and all employee details are required to obtain this license.

Shops, hotels, commercial establishments, clubs, restaurants, dining houses, and other places of public enjoyment or entertainment, excluding those covered by the Factories Act 1948, are governed by this Act. In India, obtaining a shop and establishment registration is a legal obligation.

Commercial Establishment

A commercial establishment, according to the Act, is a place where any trade, business, profession, or related projects are carried out.

Commercial Establishments Include:

  • A society registered under Societies Registration Act, 1860
  • Registered or unregistered charitable or other trusts
  • Journalistic and printing establishments
  • Contractors and auditors establishments
  • Quarries and mines not governed by the Mines Act, 1952
  • Educational or other institutes run for private gain
  • Any premises where the business of banking, insurance, stocks and shares, brokerage or produce exchange is undertaken
  • Theaters and cinemas
  • Restaurants and eating houses
  • Residential hotels, clubs
  • Other places of public amusement or entertainment.

Shops Include:

Shop means any premises where:

  • Goods are sold, either by retail or wholesale
  • Services are rendered to customers
  • This could include an office, a storeroom, a godown, a warehouse, or a workplace utilized in connection with such trade/business, whether on the same premises or elsewhere.


To apply for a shop and establishment license, entrepreneurs must prepare an application and submit it to the concerned authorities. This approach, however, requires careful documentation and legal knowledge. Vakilsearch provides complete legal services that make it simple for business owners to obtain a shop and establishment license. Our legal experts will check the applicability of shops and establishment act and collect the necessary information from you, file the application in the prescribed format, and send you the registration certificate at the earliest.

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