License for Hotel Business

Licenses and Registration Required for Hotel Business

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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’s 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 the location of the hotel. Further, the rules and regulations to obtain license for hotel industry differs according to the states.

Building Permit

The National Building Code of India was prepared by the Bureau of Indian Standards to unify the 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 is required for the Fire Department is a must for operating a hotel business. 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 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 of Places of Public Entertainment held by 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. The 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 issuance of a health trade license.

Business Registration

It is recommended that a hotel be setup under an artificial legal entity like 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 Registration

ESI is an autonomous corporation under 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.

PF Registration

A 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, pension scheme and an insurance scheme for the workforce engaged in the organized sector in India.

Bar License

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 bar license varies from state to state.

FSSAI Food Business License

A 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 renewal at the end of each year. FSSAI license for restaurants are managed by the local FSSAI office. FSSAI license for restaurants does not fall under the purview of the Central Government.

Service Tax Registration

Service tax is applicable on the accommodation services provided by the hotel and food services provided by a restaurant in the hotel. Therefore, hotels must obtain and maintain service tax registration. Hotels having room Tariff of Rs. 1000/- and above have to pay the service tax on 60% of room tariff at 14% (the net rate of Service Tax comes to 8.4%). For restaurants, the service tax is applicable on 40% of the Food and Beverages bill @ 14% (the net rate of service tax comes to 5.6%). Further, the use of banquet hall where substantial food is served attracts service tax @ 14% with abatement of 30%(the net rate of service tax comes to 9.8%).

VAT Registration

Value Added Tax (VAT) is applicable on the food served by a restaurant in a hotel. Therefore, hotels must obtain VAT registration to comply with VAT regulations. Since, VAT fall under the purview of the State Governments, VAT regulations and procedure for registration changes from state to state. It is best to therefore consult with the local Sales Tax Department.

Need more information about starting or managing a hotel in India, visit

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Comments (5)

p.s.sankara rao

Nov 15, 2015 at 10:28 PM

can we run hotel without chimney if objected by neibhours.can the building must be soundproof if objected by neibhours


aditya sharma

Apr 09, 2017 at 3:10 PM

any construction company who help for construction hostel and legal process in Dehradun.


S I Husain

Apr 10, 2017 at 1:07 AM

S I Husain says
APRIL 10, 2017 AT 12:55 AM

Your comment is awaiting moderation.

A restaurant ( without Bar) is operating from our premises for last ten years in spite of our continuous objection. Our building is a residential building of B+ G+ M+ 3 story in central Kolkata. In the building sanction plan there is no provision of Hotel/ restaurant but on the ground floor a show room is ear marked without any kitchen provision in the plan. They are using the basement as go down instead of car parking, blocked the ingress/ outguess of basement and erected a big chimney through our outer building wall as well as encroached the ingress. On our complaint Fire Deptt.revoked their FSC/ Fire License. Consequently KMC has also not renewed their Trade License during current year. Although we have informed the Local Police station about revocation of F L and non renewal of trade License but neither police nor Fire Dept. is taking any action. KMC is also silent.. WBPCB states that the noise and pollutions are within the limit of norms as such they had granted Pollution clearance certificate in total disregard to the sanctioned building plan and violation in the basement as well as encroachment. How to deal with WBPCB? What is the role of Health Deptt. in regulating the restaurant business? What is to be done in this situation to get the operation stopped?



Apr 23, 2017 at 11:00 AM

I want to open a small restaurant only Visakhapatnam. .so what kind of basic process I need to take and how to start my restaurant. ..


Raghuveera m

Dec 12, 2018 at 9:30 PM

You will taking good decide for own business in hotel som few time you are space loss after getting prafit


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