For businesses to legally conduct business activities, they must obtain the necessary licenses and permits from state or municipality governments. Certain business licenses are usually required for specific business activities, such as opening a restaurant, retail store or starting a business in Maharashtra.
If you run a business without the required licenses, the governing body may penalise it or even demand it be closed. In this guide we take you through the types of licensing and their requirements.
- Companies must apply for business licenses from state or municipal authorities to ensure they comply with Indian law
- There are three types of company registration categories: company or limited liability partnerships, private limited companies and one-person companies
- The Gumastha license is required if you plan to start a new business in Maharashtra
Business licenses vs permits
A business license and a permit are not the same. Business licenses verify that your company complies with state regulations while permits ensure that your business adheres to safety and preventative measures.
To apply for a business license, you must meet the following requirements:
- The applicant must be at least 18 years old
- The applicant must not have any criminal history or be under legal probation for severe offences
- The business must be legal
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Types of business licenses
Udyog Aadhaar registration
This license applies to investors who want to register a micro, small and medium business. The investment in equipment made by a service provider or manufacturing firm that engages in manufacturing determines who is eligible to apply for Udyog Aadhaar registration.
Once companies have completed Udyog Aadhaar registration, they can enjoy schemes provided by the government to support small businesses.
Food Safety and Standard Authority of India license
Food Safety and Standard Authority of India (FSSAI) is an Indian government agency responsible for the sanitisation and standardisation of all food products supplied throughout the country.
You must obtain a license from the FSSAI if you plan to start a food business, whether it be selling packaged food, operating a restaurant, using a cloud kitchen or any other food business model.
There are three types of FSSAI licenses, and they are categorised based on business turnover:
- FSSAI Basic Registration: turnover of up to INR 1.2 million
- FSSAI State License: turnover between INR 1.2 million and INR 200 million
- FSSAI Central License: turnover of more than INR 200 million
Companies involved in importing or exporting goods or services must obtain the Import Export Code (IEC) from the Directorate General of Foreign Trade (DGTF). To receive an Import Export Code, the company must have a permanent account number (PAN) and a bank account.
Shop and establishment act
Companies opening a retail store in India must obtain a license under the Shop and Establishments Act. The guidelines will differ from state to state as the Act is issued under state governments.
All local businesses are governed by the Act and must ensure no violations regarding child labour, working hours, working conditions and wage policies.
If you plan to start a new business in Maharashtra, you will need a Gumastha license. The required documents include the following:
- Application letter to the Municipality of Greater Mumbai
- Authority letter for business
- Company’s Certificate of Incorporation
- Director’s ID and address proof
- Government-prescribed fees for a partnership
- Memorandum and Article of Association
- PAN card
- Residence proof or an owner’s no-objection letter
Fire department license
A fire department permit is necessary for companies that deal with flammable materials and is open to the public (such as restaurants, hotels, and petrol stations).
Air and water pollution permit
The Environmental Department requires a permit if the business works with manufacturing operations using natural resources. Obtaining this permit before any building is essential to avoid complications.
How Acclime can help
Businesses need to obtain business licenses and permits, as government authorities can fine or shut down the company because of non-compliance. Business licenses can be acquired through governing authorities’ offices or websites. If you are unsure about your license requirements, contact a professional services provider like Acclime for a hassle-free application.
We can help you find out what type of licenses and permits your business requires and guide you on obtaining a business license in India.
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