Several licenses or registrations are needed to start and operate a hotel in India. Many permits and registrations are required before the hotel can be opened and must also be renewed once the hotel has been operational. Most licenses also require that the hotel meet specific criteria or rules to maintain validity. Therefore, Entrepreneurs who are in the hotel business must understand these licenses and register to run a smooth hotel business. Many of the requirements for a permit depend on a hotel’s location, type, and star rating. The rules and regulations for obtaining a hotel license vary from one state to another. This article explains the rights and registration required for the hotel business.
The Bureau of Indian Standards prepared the National Building Code of India to standardize building regulations nationwide. All Government Departments, Municipal Bodies, and other Construction Agencies adopt the National Building Code. According to the National Building Code, no one shall undertake any development, erect any building, make any alterations, or demolish it without obtaining an individual permit from the Authority. All hotels must have a building permit per the Town Planning Act, Development Act, Municipal Act, or any other applicable statutes regarding layout, building plans, water supply, sewerage drainage, electricity, etc.
Fire Safety Permit
Hotel businesses must have a fire safety permit or certificate required by the Fire Department. Fire safety certificates are issued if the building incorporates the necessary fire safety and prevention measures required by the applicable fire safety regulations and rules.
Police Licence for Hotel
Police Departments closely monitor hotels as public spaces. All hotels must keep a log of guests who have stayed in the hotel. They must also follow the relevant regulations and hold a permit issued by the Police Department. The Commissioner or Assistant Commissioner of Police usually has the Authority to grant a police license to hotels.
Health Trade License or Trade License
Restaurants and hotels are usually required to obtain a health trade license from the local Health Department. Municipal Corporations usually issue health trade licenses. Businesses that directly impact public health must have a health trade license. A health trade license is only issued if the company adheres to the hygiene and safety standards vital for public health.
It is suggested that a hotel should be established under a legal entity such as a LLP. The liability of promoters can be reduced by operating a business under an artificial legal entity.
ESI is a corporation that operates independently under the Ministry of Labour and Employment of India. In India, businesses with ten or more workers are required to register for Employee State Insurance. Employers must pay 4.75% of wages to ESI employer contributions for employees earning less than Rs.15,000. Employees are required to pay ESI contributions of 1.75%.
Registration of PF
Any establishment with more than 20 employees in India must register for the Employee Provident Fund. The PF Board is responsible for administering a contributory fund, a pension plan, and an insurance program for employees in the organized sector of India.
A Bar License is required by the authorities if the hotel has a bar or if it serves alcohol in its restaurants. The State Government usually provides the bar license. The requirements for a permit to operate a bar vary from one state to another.
FSSAI Food Business License
An FSSAI Food Business License in India is required to operate a restaurant. FSSAI licenses are usually issued for a year and renewed annually. Local FSSAI offices manage the FSSAI restaurant license. FSSAI licensing for restaurants is not under the control of the Central Government.
Before the introduction of VAT, a restaurant bill included VAT, service tax, and a service charge. After 2019, the GST Registration Limit will absorb indirect taxes collected in India on sales and purchases of goods and services.
Restaurants in starred hotels with a daily cost of Rs.7.500 will be subject to 18% GST and be eligible for ITC. Restaurants in hotels with room rates less than Rs.7.500 per night are subject to 5% GST, but they will not qualify for ITC.
Eating House Licence
Eating houses are any place where food and drinks can be consumed on-site. The city’s Licensing police commissioner issues the Eating House License.
Lift Clearance License
You will need permission to operate a lift in a multi-story hotel. The Electrical Inspector, who is part of the Labour Commissioner’s Office, issues the license after verifying that the lift installation, structure, safety equipment, and other items are in order. State-specific applications can be used to receive lift clearance.
Imagine that your hotel is playing recorded music or videos. Then you must obtain a copyright license issued by Phonographic Performance Limited or the Indian Performing Right Society.
A valid signage license is required if you want to promote your restaurant with signs, photos, or symbols. This license may be provided by local civil authorities such as municipal corporations.
Certificate of Environmental Clearance
The Environmental Management Act of the Ministry of Environment and Forests requires this permit for specific projects. After completing a questionnaire, the CEC authority will assess any potential negative environmental impact. Restaurants are responsible for their customers’ health and the environment. Restaurants must, therefore, still apply for an Environmental Clearance Certificate.