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What licenses and permits are required by a retail shop in India.

Although the Indian retail market is one of the largest in the world, It is extremely unorganized. Only 12% of retail businesses in India operate in the organized sector and possess necessary registrations and licenses. Although digitization has made it easier for businesses to apply for these licenses, accurate information about the procedures is missing from the public domain.
What Licenses And Permits Are Required By A Retail Shop In India

Table of Contents

Licenses And Permits Required For Opening Retail Shops In India

S.No. Licenses and Permits required for opening retail shops in India
1.
Permanent Account number
2.
Tax Account Number
3.
Trade License
4.
Shops and Establishment Registration
5.
Professional Tax Registration
6.
Certificate of Occupancy
7.
Industry-specific permits and licenses

Permanent Account Number (PAN)

PAN or Permanent account number is a unique 10-digit alphanumeric code assigned to all individual and non-individual taxpaying entities by the Income Tax Department of India. Besides serving as proof of identity, PAN cards are needed by businesses for opening bank accounts, tax registrations, and filing income tax and GST returns. Besides, the Income Tax department tracks all of your business transactions, bank account activities, and tax compliances using your business PAN card. Therefore, acquiring a PAN card was made mandatory in the Income Tax Act, of 1961.
You can apply for a business PAN card online by filling Form 49 A on the NSDL or the UTTISL websites by selecting ‘firm’ in the ‘type of application’ section. Provide other details like the name of the business, address of the office, date of incorporation, etc. You will receive your e-PAN card within 7 days and have it delivered to your registered office address within 15 days from the date of application. The application fee amounts to Rs.107 for Indian applicants.

Taxpayer Account Number (TAN)

Like PAN, TAN is also a unique 10-digit alphanumeric code issued by the Income Tax Department. Your business needs to apply for a TAN in case it is involved in a Tax deduction at the source activity for its employees, staff, or any other entity providing service to it. Under Section 203A of the Income Tax Act, 1961, it is mandatory to quote the Tax Deduction Account Number (TAN) allotted by the Income Tax Department (ITD) in all TDS returns and Challans while depositing the tax in a designated Bank.
Additionally, it is mandatory for employees to quote TAN while claiming TDS in their Income tax returns. You can apply for it online by filling out Form 49B available on the NSDL website. The application fee, inclusive of taxes is Rs.65 only.

Trade License

Trade licenses are issued by municipal corporations or state governments to newly established businesses resident and operational within their boundaries. These licenses allow businesses to carry out a particular business activity at a certain location mentioned in the license application.
Trade licenses do not provide any ownership rights for the property which the business is operating from. Besides enabling businesses to trade products and services, it also helps government regulatory bodies monitor and control all business operations carried out within the state.
Trade licenses are categorized into Industrial, Shops, and Food Establishment licenses. The Shops license is essential for shops involved in the sale of hazardous substances like firecrackers, firewood, fireworks, etc. If your shop sells food or related items, you must also acquire the Food and Establishment license.
As a shop owner, you are eligible to apply for a trade license only if you are 18 years of age or above, have no criminal record, and are running a legal business in the shop. The application should be submitted 30 days before the business begins operations. You can apply for a trade license on the official website of the state government or directly submit an application in the office of the municipal corporation. You will receive it within 7-10 days from the date of application.
Once issued, the license will be valid for a year, after which it needs to be renewed. The application for renewal has to be submitted within 30 days from its expiry. However, trade licenses get renewed in the month of January only.
The following documents are required to be submitted along with the application for a trade license:
  • Business PAN card
  • Business Incorporation Certificate
  • Aadhar card, if the applicant is an individual
  • Property tax payment receipt from the municipality
  • Lease Agreement with the owner of the property
  • No Objection Certificate from neighbors in the premises where the shop is located
  • The layout of the property
  • Occupancy Certificate
  • Loan sanction document

Shops and Establishment Registration

Registration under the Shops and Establishments Act is required for all businesses in India employing full-time, part-time, and contract workers. The provisions in the act primarily ensure better working conditions for employees regarding hours of work, minimum wage, maternity leave, sick leave, number of holidays, hygienic workplace, etc. Registration under the Act indicates that the businesses are certainly focussing on the welfare of their employees.
All businesses in India must mandatorily register under the act within 30 days after their dates of registration. Different states have different provisions under the act, which businesses registered within their boundaries must follow. The procedure for registering under the act also differs from state to state. The application for registration is filed to the State labor department and usually requires proof of address of the business, proof of the identity of the owner, business PAN card, payment or bank statement, and details of the employees as supporting documents. The validity of the registration also differs from state to state.

Professional Tax Registration

Professional tax is levied on professionals including employees, employers, and businesses. It is a state tax levied differently by different states in India. If the state where a business is located has provisions for mandatory registration under the act, the business must acquire a professional tax registration within 30 days from the start of business activities. Usually, employers, including businesses, deduct the tax at source from their employees by submitting it to the government on their behalf. Employees can claim TDS for the professional tax while filing their tax returns.
The procedure for registration is different for different states. However, the supporting documents required for registration are almost similar across states where the tax is applicable. These include proof of office address, business PAN card, certificates of registration and incorporation, Professional tax enrollment certificate, and a blank canceled check from the business bank account.

Certificate of Occupancy

A certificate of occupancy is required if you’re constructing a new property, buying a new property, modifying an existing property, or changing the use of the property. The certificate is issued by the local zoning department after the property is inspected for several compliances, some of which include plumbing inspection, fire safety inspection, electrical inspection, etc. The certification ensures that a property is built, renovated, or used in compliance with building safety standards and codes prescribed by the law.

Industry specific permits and licenses

Businesses require industry-specific certifications and licenses before opening a retail shop or beginning business operations. For example, a food business will require an FSSAI registration, a pharmacy would require a retail license, etc.

How can SetIndiaBiz Help?

Acquiring all these licenses can be tedious, costly, and time-consuming if you lack expertise and knowledge about the procedures for application. At SetIndiaBiz, we have been providing license registration services to our clients for decades. Our services are quick, inexpensive, credible, and consistent in quality. If you are looking forward to opening a retail shop in India, do check out and avail our services regarding the same.

About Setindiabiz

Setindiabiz is an organized team of experienced CA, CS, & Lawyers, duly supported by a pool of trained accountants & paralegal staff that provides quality & affordable compliance services to startups & small businesses in India. The views, statements and recommendations expressed in this article or post are only for the sole objective of providing information, and it does not constitute professional advice or recommendation of the company. Neither the author nor the company or its affiliates accepts any liability for any loss or damage arising from any information in this article or any actions taken in reliance thereon.
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