The hotel business is one of the best-performing businesses in the world, and that is the main reason why many people want to set up their Hotels in busy places of the country. For smooth registration of a hotel with the government in India, you are required to obtain mandatory licenses and permits to set up a hotel in India.
A hotel with proper licensing demonstrates professionalism and reliability in the competitive hospitality industry. This blog will explore the key licenses and registrations required to launch and operate your hotel smoothly.
Introduction
Running a hotel business in India undoubtedly involves a list of licences and registrations. An essential permit must be obtained before construction activity begins, so start early and be aware that the process takes time. It requires group discussions to determine the ideal location, select suitable staff, and promote the hotel accordingly.
As a result, a proper knowledge of the list of licences required for the hotel business is considered essential for starting up a firm in this sector. And keeping the company running properly. Moreover, the laws and regulations for obtaining a hotel industry license are different from state to state.
A. Infrastructural Related Licences
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Building Permit and Occupancy Certificate
Before commencing construction, a building permit from the local municipal authority is required. The National Building Code of India ensures that hotel construction is safe and meets all the design parameters set.
After construction, an occupancy certificate must be obtained, accompanied by a declaration that the building is safe for use. The local municipal authority or town planning department issues it.
The requirements include application, site plan, architectural and structural drawings, property title documents, and No Objection Certificates (NOCs). In general, permits are valid for three to four years, although it might depend on the height of the building and local legislation.
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Fire Safety Certificate
A certificate issued by the state fire department is essential because hotels have a high risk of fire accidents. This certificate ensures compliance of the premises with the standards outlined in the National Building Code of India for fire safety.
This is one of the most crucial licensing requirements for hotels in India, as it verifies whether the hotel is equipped with the necessary fire prevention and safety measures.
A No Objection Certificate also needs to be obtained from the fire department to operate a restaurant.
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Police Clearance Certificate
The Police Department of the district issues the license. The hotels are considered public places as the Police Department constantly observes them. For this reason, all hotels are required to maintain a proper record of all guests who have ever stayed at the hotel, comply with relevant regulations, and hold a valid permit from the Police Department.
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Trade License /Health Trade License
A health trade license is essential for the hotel to ensure that its food and beverage operations meet health and hygiene standards. The local municipal health department issues it after inspecting the premises.
The health trade license is essential in ensuring public health safety in hotel operations. Hygiene and safety norms, which have a direct relevance to public health, must be followed, as this is a prerequisite for obtaining a health trade license.
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Eating House License
Every place where the public is permitted and where any food or drink is served for consumption on the premises is considered an eating house. The city licensing police commissioner grants the Eating House Licence.
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Lift Clearance License
If your hotel is a high-rise building and you wish to operate a lift or elevators, you must obtain permission to ensure compliance with safety and regulatory standards. After inspecting the installation of the lift, the structure, and the safety gears, it is issued by the local electrical inspector or the competent authority of the area concerned.
B. Employment and Tax-Related Licences
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Business Registration
It is the registration of the hotel as a legal entity, such as a company or Limited Liability Partnership (LLP). The process provides the business with a unique identity and restricts the liability of the promoters. It’s an essential step in formalizing the company and ensuring proper compliance with regulatory mechanisms.
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GST Registration
GST Registration becomes compulsory for hotels where, in a year, the turnover exceeds Rs 20 lakhs or in special category states, Rs 10 lakhs. They become eligible to collect and remit Goods and Services Tax from guests and also claim input tax credits for their purchases.
GST Registration ensures that hotels remain compliant with the laws of Goods and Services Tax and operate legally under the same.
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ESI Registration
All hotels with 10 or more employees require ESI registration. It is a form of social security that primarily provides medical care and maternity benefits to employees. With ESI, it guarantees employees proper social security benefits.
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PF Registration
A hotel with more than 20 employees needs PF (Provident Fund) Registration. Registration with the Employees’ Provident Fund Organisation (EPFO) contributes to retirement benefits by enabling employees to save for their old age.
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Signage License
To maximize profits, you need to advertise your restaurant effectively. You need to obtain a license; this must be a signed license. This license is required for hotels to display outdoor advertising and signs.
This license is usually issued by the local municipal authority, which is in charge of public advertising displays. The permit ensures that your advertising displays are in accordance with the standards governing your area.
C. Foods and Ambience Related Licences
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Food Licence/FSSAI Licence
Any food business operating in India needs to obtain a food license, commonly known as the FSSAI license. This license is required for conducting a hotel business, as most hotels serve meals to their guests.
It ensures that the food served to them is totally safe and hygienic. This license is issued under the Food Safety and Standards Act. The food safety license is typically provided for one year and renewed annually.
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Bar license
A hotel should have a bar license if it serves alcoholic drinks, and the state excise department or similar authority issues this license. It also ensures that the liquor laws existing in the state or region are obeyed. Typically, such permits or permissions are issued by departments that function directly under the State Government. Therefore, the provision of a bar license differs in every state.
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Certificate of Environmental Clearance
The Certificate of Environmental Clearance is issued by the Ministry of Environment, Forest, and Climate Change, which aims to ensure that the hotel’s operations will not have an adverse effect on the environment. This clearance is necessary for complying with environmental regulations and sustainable operation.
The CEC ensures compliance with environmental regulations and is typically valid for up to 10 years, requiring renewal if the project extends beyond this period.
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Music License
A music license is necessary for all the hotels that engage in playing recorded music or videos, such as background music, live events, etc. However, this license is granted only by copyright societies, such as Phonographic Performance Limited (PPL) and the Indian Performing Rights Society (IPRS).
Copyright law compliance enables a hotel to play copyrighted music legally. Playing music in a restaurant without a license will bring the restaurateur legal trouble.
In addition to the above, various specific licenses and regulations apply depending on the nature of your business and its location.
The Hospitality Industry Branch is an exception, as it requires numerous approvals and licenses from local Governments to the central government, which range from police to labor laws and even tax liability to environmental clearance, depending on the scale and extent of the business.
Conclusion
In the case of running a hotel business in India, compliance with regulations should be the most important. These hotel business licenses and registrations enable the operation of a business legally while establishing and maintaining confidence among customers in an intensely competitive hospitality industry.
Registration of your new hotel business requires numerous licenses and permits to ensure that your hotel is family-friendly. It is noteworthy that business registration processes vary significantly depending on location and local requirements.
It is always advisable to seek the advice of legal & financial experts who are well-versed in these specific requirements in your area.
