Register your shop under the Shop Act to conduct fair business

How does the process of applying for a Shop and Establishment License work?

Once you fill in the application form, submit it along with the required documents. You will have to collect a stamped challan on payment of the prescribed fees. Submit the challan along with the application form to the Chief Inspector of the respective area. The form will then be reviewed by the Chief Inspector and once this is done, the shop or establishment will be certified and will receive a registration certificate. This usually takes about a week to be done. The Indian government necessitates that hereafter the registration certificate be displayed in the establishment or shop at all times in a prominent place and on expiry, should be duly renewed.

Of course, the issuing of the license will be subject to compliance of all mandatory provisions of the Act. The inspector may visit the establishment at any point of time to ensure that all the provisions have been met. If this is not the case, a fine is usually levied on the establishment.

However, if a person is looking to shut down the establishment due to lack of business, the owner has to send a letter to the Chief Inspector within a period of 15 days of the closing, mentioning the issues being faced and the subsequent decision to close down the business. On reviewing the owner’s letter, the Chief Inspector will cancel the registration certificate, removing the shop or establishment from the official register.

What is the fee structure for the Shop Act License Registration?

According to the Shop Act website (http://shopact.in/shop-act-fees/) whether you are looking to register your shop/ establishment or are looking to renew its license, the fees needed to be paid will vary based on the number of employees you have.

Establishments having more than 100 employees have to pay a registration and renewal fee of about Rs. 6000 and a late fee of about 3000. In many cases, however, the fee structure is based on the type of establishment you are running and not the number of employees hired. For instance, according to the Madhya Pradesh government website the cost of registering and renewing the Shop License is quite different from the above-mentioned structure.

So if you are deciding to start a shop or an establishment that would fall under the Shop Act, you should go ahead and check the requirements to register yourself for a Shop and Establishments License right away.

Get a labour license now to avoid penalties

If you are a contractor who is making use of 20 labourers or more to do a particular job, then you would need a labour license. Even if more than 20 workers are being employed on a project site, you would need to get in touch with the Licensing Officer of that Area and obtain a contract labour license according to the Contract Labour Act, 1970.

Understanding the Contract Labour Act

Brought into force by the Indian Legislature in 1970, the Contract Labour Act basically seeks to ensure that the working conditions of contract labour is regulated. This Act would apply to any establishment wherein 20 or more people are employed as contract labour. Similarly, it would also hold for any individual contractor who employs 20 or more people.

However, there are certain cases where this Act does not apply. This includes establishments located in the SEZ and establishments where work performed is of a seasonal nature, not exceeding 60 days in a year. Similarly, it does not apply to an establishment where work is not provided for more than 120 days annually.

What is the process of registering establishments having contract labour?

If your establishment makes use of contract labour, then you should go ahead and get your establishment registered with the government. You need to fill out an application for registration and come with a receipt for the required fees that need to be paid. If everything is duly submitted, the Registering Officer can register the establishment and provide a copy of the registered certificate instantly.

The contractor should always ensure that the certificate given has the name of the establishment along with its address, the type of business along with the maximum number of people to be taken as contract labour by the establishment. These are some of the essential points that have to be in the document along with other particulars.

How do you get a New License for Contract Labour?

According to the Maharashtra Department of Labour (https://mahakamgar.maharashtra.gov.in/lc-license-contract-labour.htm) the process for getting a labour license is quite simple. You can go to this website https://lms.mahaonline.gov.in/ and choose whether you want to register as an individual or a corporation. You will then be provided an OTP to continue with the process. Fill in your email ID and other details to register yourself. Make sure you do not miss any mandatory fields as the process will remain undone.

Once this is done, you will receive an email to your registered email ID. You will be required to open the mail and do as the instructions say. With this, your registration will be completed. Moving forward, your email ID will be your User ID to log in to the website and the password can be generated by you.

You now have everything needed to log in and complete the procedure so log in to the website once again and fill in your User ID and password to get through to the services. Choose the option of contract labour license and click on new license. You will be provided with another form which you will have to fill and submit. You will then receive an application ID before the screen closes.

Next, you will have to open the application ID to check the status of the application. Read the instructions that are given on the right side of the screen. If the status says ‘Upload Documents’ then you may move on to upload the required documents as shown on the right side of the instructions. Once you browse the required files, you can upload the document at the bottom. Check the status again. If all has been done correctly, the next instruction will be to make the payment. Once again, the option to pay the fees will appear on the right side of the screen. Click on this and make the required payment. Check the status once again after doing this, if you receive the sign saying ‘under scrutiny’ it means the application will now have to be scrutinised before further steps can be taken.

This may take a while so you can come back the next day to check the status and see whether it is ‘approved’ or ‘rejected.’ Naturally, the former option is the one you are looking for. If rejected, you can go back to your mail and check the instructions given in the mail. It will instruct you to reapply once again on the website and you can again go through the process by following the instructions that come on the right side.

If any changes need to be made in the application, you can make them now. If the process failed due to rejection of certain documents, you can delete the rejected documents and attach the proper ones. If there is an instruction asking for payment of partial fee, you can make the payment online, just as before. After complying with the mentioned instructions and correcting any errors that may have occurred the first time, you should once again get the sign ‘Under Scrutiny.’

Once the status shows ‘Completed’ you can click on the download certificate button at the right side of the screen and the license will either download automatically or you will receive the license over email.

Documents needed for Contract Labour License

Whether you are looking to get a new license for your contract labour or renew the existing license, you will have to get your hands on certain documents before moving in for the application process. These are mentioned below.

• Self-Declaration Annexure A
• Self-Declaration for Attestation Annexure B
• Photograph with size between 20Kb to 30 Kb
• Signature having size between 9Kb to 15 Kb
• Form V – which is a certificate for the principal employer
• Form IV-A Undertaking
• Any proof if identity

In case of Old Users whose licenses need to be renewed, in addition to the above, you would have to submit:

• 1. Copy of the License
• 2. Copy of fee receipt which was paid earlier
• 3. Copy of security deposit receipt paid earlier

All of these documents will have to be scanned and submitted along with the application for a labour license or renewal of one.

So if you are using contract labour and haven’t yet got your labour license yet, make sure you do so instantly because any establishment found not having enrolled themselves within the specified time will be liable to punishment as per section 36.

What is GST?

The Goods and Services Tax, or GST, is an indirect tax that has been placed on the purchase of Goods and Services across the country. It works on different stages of the production process and has five different slabs depending on the items or services being delivered. The five stabs are 0%, 5%, 12%, 18% and 28%. There are some goods not taxed under the GST rules, goods such as petroleum products, alcoholic drinks, electricity and many others are taxed individually by state Governments.

GST is made up of three separate components.

CGST: is collected by the Central Government on an intra-state sale. For instance: transaction happening within the same state.

SGST: is collected by the State Government on an intra-state sale. For instance: transaction happening within the same state.

If the transaction is taking place within the same state, the tax would be shared between the state and the centre.

IGST: is collected by the Central Government for inter-state sale. For instance: transaction happening across state borders. If the transaction is taking place across two states, an IGST would be charged and the tax would be taken by the centre.

If you are looking for the state-wise breakup of the tax, you can check it out through the link here. (http://gstcouncil.gov.in/sgst-act)

GST reduced the number of smaller taxes that were being paid throughout the production process and turned it into one main tax. This made it easier to track the payments going through and fro. The various taxes cut out of the process are mentioned below.

• Central Excise Duty
• Duties of Excise
• Additional Duties of Excise
• Additional Duties of Customs
• Special Additional Duty of Customs
• Cess
• State VAT
• Central Sales Tax
• Purchase Tax
• Luxury Tax
• Entertainment Tax
• Entry Tax
• Taxes on advertisements
• Taxes on lotteries, betting, and gambling

How does GST work?

The GST came into effect about two years ago after an amendment made to the constitution of India by the Government of India. With the implementation of this tax, smaller and varying taxes throughout the production process were officially cancelled out and completely replaced. The main reason for working on something like this was to get the 2 trillion dollar economy of the country in order and account for the smaller amounts that were missed during the process.

What were the positive effects of implementing the GST?

Although the implementation of GST came with a lot of negative flak from the opposition, many industry leaders and other smaller businesses, the Government believed that going ahead with it would have significantly more pros than cons.

One of the largest expenses that companies went through was logistics since goods were being moved from one part of the country to another. The implementation of GST meant there were no toll fees throughout the way and the amount was paid as a whole. This reduced the expense generally paid in brides or cutoffs which were randomly levied at every crossing. Furthermore, this also reduced the time being spent on travel by 20%.

Many of the smaller businesses assisting in the larger picture were often getting sidelined in the past. A lot of the people doing the work were being paid in cash which means that they cruised under the radar. With the implementation of the GST, a lot of new taxpayers were necessarily added to the system. This was a major step in the Government’s efforts to curb the movement of black money around the economy.

The Government bragged of having the entire system online, which meant that various individuals could handle their filing and the registration process at their own convenience. This according to them meant that more people would sign up under the new system and that is exactly what happened. This significantly regulated the unorganized sectors and made a significant difference with the number of people now paying their taxes.

Individuals who have already paid GST can claim a tax credit when submitting their taxes. Each time this is done, the sale and cost price is reduced for the buyer since there is a lower tax liability.

You can always check out some more of the positive effects here. (https://cleartax.in/s/gst-law-goods-and-services-tax)

There were a couple of downsides with the entire plan.

When dealing with any plan across a country as large as India, is going to need some constant refinement and change. The GST was no different. There were a couple of loopholes with the implementation of the act and they were pointed out by various political parties, economists within the country, and external entities as well.

The World Bank mentioned that the GST law was too complex for a country like India, considering the multiple systems within the country that it has to govern. They also mentioned that 28% on tax is the second highest tax rate ever, from their sample of 115 countries.

Till date, the system has a couple of issues with there being delays in receiving tax refunds, the website is also known to have crashed under the weight of all the people filing their returns, at least once in the past. The tax has made it difficult for small businesses and industries to stay afloat and it has been slammed by the opposition Government for that.

What does the Ministry of Micro, Small, and Medium Enterprises do?

Small scale and medium scale industries are a large part of a countries economy especially when the country is India where the largest part of its economic growth comes from agriculture and similar industries. To increase accountability among industries, the Government has further classified industries into smaller sub-sections of micro, small or medium enterprises. The Ministry of Micro, Small, and Medium Enterprises is the actual body across the country that supports these industries through the MSMED Act in the constitution. Other than the ones stated above, proprietorship firms, LLPs, public and private limited companies can also be registered under the MSMED Act.

How do different shops or businesses get covered under this Act?

For a shop or a small business to be covered by this act, they have to register for it. Although the process is quite often deemed as difficult, it is definitely worth it. To begin the registration process, the founder of a company needs to figure out which category to add it under. Finding the right category is not as simple as it might seem and is dependant on the investment made by that sector. Furthermore, the classifications are separate for the service and manufacturing sectors.

The registration under the MSME Act is not compulsory in India. However, getting your company or establishment registered under the Act would definitely be in your interest since the Government offers multiple benefits to registered entities.

How are you supposed to go about the registration process?

The registration process is not that tough but mainly needs you to write an application, mentioning the details of the industry that you are working in. This application would have to be submitted at the respective Government office. If all the information provided in the application and the supporting documents add up, the application is usually processed within 15-20 days.

If you are looking for a system where you can register through an official website, right off the bat, hit up the link mentioned below. (https://msme.gov.in/online-application)

Since the straightforward but tedious registration process might take a toll, there are multiple websites and private entities who help with the entire process, including following up post the submission. You would be informed about the results and accordingly would be able to begin evaluating your next steps.

What are the benefits of registering under the MSMED Act 2006?

Some of these benefits include credit at a low-interest rate, incentives on products for exports, excise exemption, statutory aid such as reservations, and the interest on the payments delayed due to unavoidable circumstances.

The industries that are registered are provided for under the State and Central Government schemes and are kept in the loop of when new schemes are being offered, which in turn provides accountability.

Some of the schemes have been mentioned below in greater detail.

Reservation policy

Coming up as a smaller company can be difficult and that is why the Government has protected the companies registered under the MSMED Act by allowing certain products to be handled only by them. This means that other, larger, industries would not be able to handle this at all.

Aid to improve technology

The Government has put into place certain schemes these companies can avail of so that they can upgrade their machines and other technology, without having to bear a very heavy cost. This gives them a slight advantage when dealing with others or competing with companies that are using advanced and improved tech.

Market Assistance

Other than giving MSMEs exclusivity when creating some of their products, they have promised to purchase the items that they create, if they cannot find buyers or are having trouble marketing the same to the public.

Other than these there are many more that are of smaller importance, if you are looking for more information about the Ministry of Micro, Small and Medium Enterprises, you can check out their official website.