Shop and establishment act in India FAQs – Part 1

by varun · Published November 3, 2020 · Updated December 24, 2021

The Shop and establishment act comes under purview of department of labor and employment in India. It supervises any shop, trade or business that is carried out. This act governs and keeps a close eye on commercial establishments and also the working of the societies, printing firms, educational institutions and other premises which undertake banking, insurance, and stock or share brokerage.

Under this act, every eligible establishment is provided a shop and establishment certificate. In this article, we would deal with various FAQs related to Shop and establishment act. In previous article, we have already discussed FAQs related to application for Shop and establishment certificate.

Q – How is term “Shop” is defined under Shop and establishment act?

A – “Shop” under this act is defined as any premise where goods are sold in wholesale or retail. It also includes place where services are rendered, warehouse, Godown, workhouse etc. It excludes factory as same is covered under Factories act 1948.

Q – How is term “Establishment” is defined under Shop and establishment act?

A – establishment could be anything from Shop, commercial establishment, Residential hotel, Restaurant, Theatre, public amusement, Retail trade or business.

Q – Which entities are required to obtain a shop and establishment certificate under this act?

A – Following entities are required to obtain a this certificate under this act. These are –

Retail and wholesale shops;
Premises where services are rendered to customers including office;
Workhouse or workplace, used for trade or business
Theatre or place of public entertainment or amusement
Commercial establishment
Storeroom, godown or warehouse;
Restaurant or eating house
Residential hotel

Q – Do factory owners need to register under shop and establishment act?

A – No, factory owners are not required to register under this act as they are governed by different act altogether.

Sample shop and establishment certificate in Delhi

Q – Is Shop and establishment act applies uniformly across India?

A – Yes, this act applies to whole country but every state has its own act to govern entities falling within state’s geographical boundary.

Q – What are the benefits of obtaining a shop and establishment certificate by a entity?

A – There are numerous benefits of obtaining a this certificate. Pointing out few of main benefits below-

It acts as a legal proof for carrying out a business as it is issued by Government authority.
Government introduces various benefits for shops registered under this act. Only those entities that are registered this act could benefit from them.
Bank accepts it as a valid proof for opening a current account in the name of the firm.
It make a firm captured under a legal framework and dispute resolution is much more easier compared to unregistered firms.
It helps in getting financing facility from Banks and NBFCs as it is considered as a valid proof of running a business under legal framework.

In this article, we have discussed important FAQs related to shop and establishment act. You can read articles on FAQs on IEC code and FAQs on Udyog Aadhar on respective links. You can also follow out GST registration FAQs series on this link.