Licenses and Registration Required for Hotel Business
Licenses and Registration Required for Hotel Business
A number of licenses and registrations are required for starting and operating a hotel business in India. Many of the licenses and registrations must be obtained prior to starting the hotel and renewed while the hotel is operational. Further, most licenses require the hotel to meet certain rules or criteria for maintaining validity. Therefore, it is important for Entrepreneurs in the hotel industry to be aware of these licenses and registrations – to operate a hotel business smoothly. A lot of the license requirements depend on the type of hotel, star rating, amenities, and location of the hotel. Further, the rules and regulations to obtain a license for the hotel industry differ according to the state. The present article briefs the Licenses and Registration Required for Hotel Business.
The National Building Code of India was prepared by the Bureau of Indian Standards to unify building regulations throughout the country. The National Building Code is adopted by all Government Departments, Municipal Bodies, and other Construction Agencies. As per the National Building Code, no person shall carry out any development, erect, re-erect or make alterations or demolish any building or cause the same to be done without first obtaining a separate permit for each such development/building from the Authority. Therefore, all hotels must have a proper building permit as per the relevant Town Planning Act or Development Act or Municipal Act, or any other applicable statutes for layout, building plans, water supply, sewerage, drainage, electrification, etc,
Fire Safety Permit
A fire safety certificate or permit required for the Fire Department is a must for operating a hotel business. A fire safety certificate is usually provided if the building has incorporated proper fire prevention and fire safety measures as required under the relevant fire safety rules and regulations.
Police License for Hotel
Hotels are public places that are monitored closely by the Police Department. Therefore, all hotels must maintain a proper log of all Guests who have stayed at the hotel, follow relevant regulations and maintain a valid permit from the Police Department. Police license for hotels usually falls under the power of licensing Places of Public Entertainment held by the Commissioner or Additional Commissioner of Police.
Health Trade License or Trade License
A health trade license is usually required from the local Health Department for restaurants and hotels. Health trade licenses are usually issued by the Municipal Corporation. A health trade license is required for businesses that have a direct impact on public health. Compliance with the relevant hygiene and safety norms, which are important for public health, is a prerequisite for the issuance of a health trade license.
It is recommended that a hotel be set up under an artificial legal entity like a company or LLP. By operating a company under an artificial legal entity, the liability of the promoters with respect to the business can be limited and the business as a going concern would be easily transferable to another person.
ESI is an autonomous corporation under the Ministry of Labour and Employment, Government of India. Employee’s State Insurance (ESI) registration is mandatory in India for Businesses that employ 10 or more employees. To maintain compliance with the ESI Regulations, the employer must contribute 4.75% of the wages for all employees earning Rs.15, 000 or less toward ESI employer dues. The employee is required to contribute 1.75% of his/her wages as ESI dues.
An Employee Provident Fund (PF) Registration is required for any establishment that employs more than 20 persons in India. The PF Board administers a contributory provident fund, a pension scheme, and an insurance scheme for the workforce engaged in the organized sector in India.
If the hotel operates a bar or serves alcohol in the restaurants, a Bar license will be required from the relevant authorities. Bar license is usually provided by departments operating under the State Government. Hence, the requirement for a bar license varies from state to state.
FSSAI Food Business License
An FSSAI food business license under the Food Safety and Standard Act is required for operating a restaurant in India. The FSSAI food business license is usually provided for one year and is renewed at the end of each year. FSSAI license for restaurants is managed by the local FSSAI office. FSSAI license for restaurants does not fall under the purview of the Central Government.
Prior to the introduction of GST a restaurant’s bill comprised VAT, services tax, and service charge. However, after 2019, indirect taxes collected on the sale and purchase of goods and services in India have been absorbed by the GST Registration Limit regime of indirect taxation.
Restaurants at starred hotels that have a daily room cost of Rs.7, 500 would be charged 18% GST, and they will be eligible for ITC. Restaurants at hotels that charge less than Rs.7, 500 per night will be charged 5% GST but will not be eligible for ITC.
Eating House License
Every area where the public is allowed and where any kind of food or drink is provided for consumption on the premises is referred to as an eating house. The Eating House License is issued by the city’s Licensing Police Commissioner.
Lift Clearance License
If your hotel is multi-storied and you want to operate a lift, you will need to get permission to do so. After verifying the installation of the lift, structure, safety gears, and other products, the Electrical Inspector issues this license from the Labour Commissioner’s office. For receiving lift clearance, state-specific applications are available.
Suppose your hotel outlet is playing any recorded music or video. In that case, you must obtain a license in compliance with the Copyright Act of 1957 issued by Phonographic Performance Limited or the Indian Performing Right Society.
You must acquire a valid permit, which is the signage license, if you wish to advertise your restaurant through signs, flyers, photographs, and symbols. Local civil authorities, such as municipal corporations, may provide you with this license.
Certificate of Environmental Clearance (CEC)
This permit is required as a part of the Environmental Management Act under the Ministry of Environment and Forests for a specific type of project. An assessment is done to rule out any negative environmental impact by the CEC authority post-filling out a questionnaire. The restaurant is responsible not only for the health of its customers but also for the environment. As a result, restaurants must still apply for a Certificate of Environmental Clearance.
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