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Determining Eligibility Under the Shops and Establishments Act

Businesses intending to establish commercial establishments or shops in India must adhere to the Shops and Establishments Act. This regulation is enacted at the state level, and therefore, its specifics can vary from one state to another. Nevertheless, the core principles are consistent across states, focusing on aspects such as employee working hours, annual leaves with wages, compensation, and the employment of women and children.

Varied Names, Common Objectives

Although the nomenclature may differ from state to state, the purpose remains the same. For example, in Bihar, it’s known as the Trade License; in Maharashtra, the Gumasta License; and in Delhi, UP, and Haryana, it’s referred to as the Shop and Establishment License.

Eligible Businesses Under the Act

The Shops and Establishments Act requires the proprietor or owner of commercial establishments and shops to register. Eligible entities include:

  1. Charitable trusts, including unregistered ones.
  2. Societies registered under the Societies Registration Act, 1860.
  3. Businesses offering services or office work.
  4. Establishments related to professionals such as medical practitioners, legal practitioners, architects, accountants, and more.
  5. Journalistic and printing establishments.
  6. Profit-oriented educational institutes.
  7. Quarries and mines not governed by the Mines Act, 1952.
  8. Premises where insurance, banking, brokerage, stocks, and shares business is conducted.
  9. Cinemas and theatres.
  10. Restaurants, hotels, cafes, clubs, and other eating establishments.
  11. Public entertainment or amusement places.

Additionally, state governments can designate more establishments as eligible for registration under the Act.

Shops Defined

The Act categorizes shops as premises where:

  1. Goods are sold, either wholesale or retail.
  2. Services are rendered to customers.
  3. Offices, godowns, store-rooms, workplaces, or warehouses, used in connection with trade or business.

Exemptions and Variances

Certain establishments and shops may be exempt from registering under the Shops and Establishments Act, depending on state-specific regulations. Exempted entities typically include government offices, transportation services, establishments caring for the infirm, and more.

The Act may also provide exceptions regarding opening and closing hours and weekly holidays for certain businesses such as medical shops, educational institutions, and food-related establishments.

It’s essential for businesses to understand the specific requirements of their state’s Shops and Establishments Act to ensure compliance. The Act aims to regulate and facilitate the smooth operation of commercial establishments and shops while safeguarding employee rights and working conditions.


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