Hotel business is the one of the best performing business of the world and that is the main reason why most of the people want to set up their own Hotels in the 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 about the key licenses and registrations that is required to launch and run your hotel smoothly.
Introduction
Running a hotel business in India undoubtedly involves a list of licence and registration. All the necessary licenses would need to be obtained before the construction activity starts, so start early and be aware that they take time. It needs group discussions to find the perfect location, good staff to be hired, and the hotel to be promoted 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
Building Permit and Occupancy Certificate
Before commencing construction, a building permit from the local municipal authority is taken. The National Building Code of India ensures that the hotel construction is safe and that it meets all the design parameters set.
After construction an occupancy certificate needs to be obtained with a declaration that the building is safe for use. It is issued by the local municipal authority or town planning department.
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 legislations.
Fire Safety Certificate
A certificate issued by the state fire department is essential because hotels have a high risk of fire accidents. This certificate will ensure compliance of the premises with the standards under the National Building Code of India for fire safety.
This is one of the most important license requirements for hotels in India because it checks 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.
Police Clearance Certificate
The license is issued by the Police Department of the district. The hotels are considered public places as they are constantly observed by the Police Department. For this reason, all hotels are supposed to keep a proper record of all the guests who have ever been at the hotel, follow relevant regulations and have a valid permit from the Police Department.
Trade License /Health Trade License
A health trade license is important for the hotel to ensure that its food and beverage operations are up to health and hygiene standards. It is issued by the local municipal health department after inspecting the premise.
The health trade license is important in ensuring public health safety in hotel operations. Hygiene and safety norms, which have a direct relevance to public health, need to be followed, which is a prerequisite for the issuance of a health trade license.
Eating House License
Every place where the public is permitted and where any type of food or drink is served for consumption on the premises is considered an eating house. The Eating House Licence is granted by the city licensing police commissioner.
Lift Clearance License
If your hotel is high-rise and you wish to run a lift or elevators, then you have to seek permission so as not to violate any 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 competent authority of the area concerned.
B. Employment and Tax Related Licences
It is the registration of the hotel as a legal entity, like a company or 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 business and ensuring proper compliance with regulatory mechanisms.
GST Registration
GST Registration becomes compulsory for hotels wherein, in a year, turnover crosses 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.
ESI Registration
All hotels with 10 or more employees require ESI registration. It is a form of social security, mainly providing medical care and maternity benefits for employees. With ESI, it guarantees employees proper social security benefits.
PF Registration
Hotel with more than 20 employees needs PF (Provident Fund) Registration. The registration under the Employees’ Provident Fund Organisation (EPFO) contributes to retirement benefits by helping employees save for their old age.
Signage License
In order to maximize the profits, you need to advertise your restaurant in an efficient way. You need to obtain a license; this must be a signed license. This license is necessary for hotels to put up outdoor advertising and signs.
This license is usually issued by the local municipal authority which has charge of public advertising displays. The license ensures that your advertising displays are in accordance with the standards governing your area.
C. Foods and Ambience Related Licences
Food Licence/FSSAI Licence
Any food business operating needs to obtain a food license that is a commonly known FSSAI license in India. This license is required for conducting a hotel business as most of the hotels serve meals to their visitors.
It ensures that the food served to them is totally safe and hygienic. This license is issued under the Food Safety and Standard Act. The food safety license is usually provided for one year and renewed at the end of each year.
Bar license
A hotel should have a bar license if it serves alcoholic drinks and this license is issued by the state excise department or similar authority. It also ensures that the liquor laws existing in the state or region are obeyed. Normally, such licenses or permissions are issued by departments functioning directly under the State Government. Therefore, the provision of a bar license differs in every state.
Certificate of Environmental Clearance
The Certificate of Environmental Clearance is issued by the Ministry of Environment, Forest, and Climate Change, which aspires that the hotel’s operations will not be have adverse effect to 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 afterwards if the project goes on beyond this period.
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 comes only from the copyright societies like Phonographic Performance Limited (PPL) and Indian Performing Right 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 in legal trouble.
In addition to the above, there are various specific licenses and regulations that apply depending on the nature of your business and its location.
The Hospitality Industry Branch is an exception as it needs numerous approvals and licenses from the local Governments to the Central Government, that range from police to labour laws and even from 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, regulations compliance should be the most important. These hotel business licenses and registrations make it possible to operate legally while establishing and maintaining confidence among customers in such an intensely competitive hospitality industry.
Registration of your new hotel business requires a lot of licenses and permits that will ensure that your hotel business 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.
