Key Licenses required to Start a Retail Business in India
Despite being one of the world’s largest retail markets, a mere 12% of retail businesses in India operate within the organized sector, equipped with required registrations and licenses necessary for legal compliance. Digitization of licensing services across regulatory authorities has undoubtedly eased their application processes. However, the scarcity of precise information about these processes has left entrepreneurs struggling in the public domain. Retail businesses are the most common form of business establishment found around the globe. These entities directly interact with the customers to sell their products. To start a retail business you would need a successful business model and a few licenses. Types of Goods Sold in Retail Shops Some of the different types of goods available are: Convenience Goods Shopping goods Speciality Goods Unsought goods Impulse goods Convenience Goods These are goods that are readily available for the consumption of the consumer. They are the most demanded and common products out there. Further, they include products used for daily use and immediate consumption, such as milk, vegetables, fruits, etc., which are considered essential for daily life and routine. They are inexpensive. Shopping Goods These include goods that require research, comparison and planning. Unlike convenience goods, these goods cannot be bought immediately. They are bought to use over a long period to fulfil tasks in the long run. Such goods include clothing, electronics, furniture, etc. Speciality Goods Such goods will normally be reserved for an upper class of people who have the financial means to purchase such a product. This includes rare, unique products and is not easily available to everyone. The marketing of such goods is also so that it only targets that part of the consumer group that can provide such products. The ideal example of such goods is jewellery, luxurious cars, watches, accessories, etc. Unsought Consumer Goods These are such goods which are readily available but not purchased regularly. They only fulfil a particular requirement and are only bought by consumers when the need for such a product arises. Examples of which are hardware store goods, electrical components goods, etc. Benefits of starting a business in the retail industry Easy passage to market, making things simple to analyse Reduced costs Potential for rapid growth Widen your market/export ideas and reach. Customer intelligence Licenses And Permits Required By Retail Shops In India Obtaining licenses and permits required by retail shops in India ensure their legal compliance with local laws and regulations. Additionally, beyond mere legal obligations, these licenses play a pivotal role in ensuring the seamless functioning of business operations as well. From crucial tax documents like business PAN and TAN to labour law registrations under the Shops Act and Professional Tax Act, each of these licenses and permits hold a distinct significance in running a retail business in India. Besides, certain industry-specific licenses may be required to comply with sectoral regulations too. Permanent Account Number (PAN) PAN or Permanent account number is a unique 10-digit alphanumeric code assigned to all individual and non-individual taxpaying entities by the Income Tax Department of India. Besides serving as proof of identity, PAN cards are needed by businesses for opening bank accounts, tax registrations, and filing income tax and GST returns. Besides, the Income Tax department tracks all of your business transactions, bank account activities, and tax compliances using your business PAN card. Therefore, acquiring a PAN card was made mandatory in the Income Tax Act, of 1961.You can apply for a business PAN card online by filling Form 49 A on the NSDL or the UTTISL websites by selecting ‘firm’ in the ‘type of application’ section. Provide other details like the name of the business, address of the office, date of incorporation, etc. You will receive your e-PAN card within 7 days and have it delivered to your registered office address within 15 days from the date of application. The application fee amounts to Rs.107 for Indian applicants. Taxpayer Account Number (TAN) Like PAN, TAN is also a unique 10-digit alphanumeric code issued by the Income Tax Department. Your business needs to apply for a TAN in case it is involved in a Tax deduction at the source activity for its employees, staff, or any other entity providing service to it. Under Section 203A of the Income Tax Act, 1961, it is mandatory to quote the Tax Deduction Account Number (TAN) allotted by the Income Tax Department (ITD) in all TDS returns and Challans while depositing the tax in a designated Bank. Additionally, it is mandatory for employees to quote TAN while claiming TDS in their Income tax returns. You can apply for it online by filling out Form 49B available on the NSDL website. The application fee, inclusive of taxes is Rs.65 only. Trade License Trade licenses are issued by municipal corporations or state governments to newly established businesses resident and operational within their boundaries. These licenses allow businesses to carry out a particular business activity at a certain location mentioned in the license application. Trade licenses do not provide any ownership rights for the property which the business is operating from. Besides enabling businesses to trade products and services, it also helps government regulatory bodies monitor and control all business operations carried out within the state.Trade Licenses are categorized into Industrial, Shops, and Food Establishment licenses. The Shops license is essential for shops involved in the sale of hazardous substances like firecrackers, firewood, fireworks, etc. If your shop sells food or related items, you must also acquire the Food and Establishment license. As a shop owner, you are eligible to apply for a trade license only if you are 18 years of age or above, have no criminal record, and are running a legal business in the shop.The application should be submitted 30 days before the business begins operations. You can apply for a trade license on the official website of the state government or directly apply to the office of the municipal corporation. You will receive it within 7-10 days from the date of application. Once
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