>Mandatory for Traders

Shops & Establishment 

Mandatory for Traders / Establishments Doing Business

Trade License or Shop & Establishment or Gumastha License

Shops & Establishment is a state based license. Shops and Commercial Establishments licence is regulated by the Department of Labour and regulates premises wherein any trade, business or profession is carried out. The rules under the Shops and Establishments Act vary from state to state. The Shops and Establishments licence is a primary proof of survival of business in a specified jurisdiction.

Shops and Establishment Acts have been enacted by the states to regulate conditions of work and to provide for statutory obligations of the employers and rights of the employees in the unorganized sector of employment such as shops, commercial establishments, residential hotels, restaurants, eating houses, theatres and other establishments in their jurisdiction.

Compliance Parameters


The application for Shops and Establishment Registration is filed before the Labour Department having jurisdiction over the registered office of the company or LLP and every other place of business where employees are employed. The establishments that come under this Act have to mandatorily get the Shops and Establishments Registration done within 30 working days of the commencement of work whether or not it has employees.



The Shops & Establishments Act sets certain rules and regulations for work hours per day and week, rest intervals, opening and closing office hours, closed days, religious & national holidays, overtime work. Also, rules for employment of children, rules for annual leave, maternity leave, sickness and casual leave, rules for employment and termination of service. Also, rules stipulate maintenance of registers and records and display of notices and obligations for employers as well as employees.


Shop/Trade licenses are State subject and the rules differ accordingly. This license is mandatory for all business entities, even if you are working from home. It covers -  shops, commercial establishments, restaurant, hotel, theatre, public amusement, and retail trade/business

According to the Shop and Establishment Act, a Shop is a place where you can sell goods and offer services to its customers. For example, offices, warehouses or storerooms. Whereas, an establishment includes hotels, restaurants, theaters and other amusement parks

What is the difference between an establishment and a factory? Basically, a factory can be an establishment, but an establishment may not necessarily be a factory. ... A factory is a place which has been established by a company specifically to manufacture goods sold by that company.

1. This registration is mandatory for several reasons, including the opening of the current account in a bank. This Shop and Establishment Act license, forms as a basic license and a proof of your business to apply for other registrations required to run a business in India.

2. The Act is designed to regulate the payment of wages, hours of work, leave, holidays, terms of service and other work conditions of people employed in the shop and commercial establishments.

Under the Shop and Establishment Act, every business has to seek approval from Department of Labour and keep up-to-date registers regarding details of employment, fines, deductions and advances, salary and holidays. The requirements may vary from state to state. Files related to annual holidays and number of employees need to be submitted to the office of the Municipal Corporation annually.

Any amendment to the Shop and Establishment Act registration must be intimated to the concerned officer within the prescribed time. In case of closure of the establishment, the employer is required to intimate the respective officer and apply for surrender of the registration. The officer on being satisfied about the correctness of the application, will issue an order cancelling the existing registration and issue fresh Registration Certificate.

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