Capital Redemption Reserve: Definition, Uses, Tax Benefits & More

Importance of Business Licenses

Business licenses play a crucial role in India's business landscape for several reasons:

Legal Compliance

• Obtaining the necessary licenses ensures that businesses operate within the legal framework defined by government regulations.

Consumer Trust and Safety

• Certain licenses, such as FSSAI licenses for food-related businesses or health licenses for healthcare providers, signify compliance with safety and quality standards.

Public Health and Environmental Protection

• Licenses related to environmental clearances, waste management, and pollution control are essential for businesses to mitigate their environmental impact.

Taxation and Revenue Generation

• Business licenses, such as GST registration and professional tax registration, facilitate tax compliance and revenue generation for the Government.

Regulation of Market Competition

• Certain licenses, such as trade licenses and import-export licenses, regulate market entry and competition.

Employee Welfare and Labor Rights

• Labor licenses ensure that businesses adhere to labour laws and provide a safe and fair working environment for employees.

Last but certainly not least, business licenses are a badge of honour for your business. They show investors, partners, and customers that you're serious, professional, and committed to doing things the right way. In a crowded marketplace, that kind of credibility can make all the difference.

Common Types of Business Licenses in India

In India, obtaining the necessary business licenses depends on the type of business activity you intend to undertake and the location in which you plan to operate. Here are some common types of business licenses required in India:

Business Registration:

While not classified as a license, registering a business with the Ministry of Corporate Affairs (MCA) in India is a fundamental legal requirement if you are an entrepreneur establishing a business venture.

Depending on the type of business structure chosen, such as sole proprietorship, partnership, limited liability partnership (LLP), or private/public limited company, the eligibility criteria, registration process, and compliance obligations can vary significantly.

There are primarily following types of Business structures:

•  Private Limited Company

•  Limited Liability Partnerships

•  One Person Company

•  Public Limited Company

•  Sole Proprietorship

•  Partnership

Ultimately, registering your business with the MCA not only establishes its legal legitimacy but also lays the foundation for growth, credibility, and long-term success in the Indian startup ecosystem.

For detailed information regarding the eligibility criteria, registration process, and compliance obligations associated with different business structures, check out the link below.

Company Registration in India - Online Incorporation Process Explained

Udyam Registration - MSME License

Similarly, Udyam Registration is not technically a license. However, it provides recognition and certain benefits to Micro, Small, and Medium Enterprises (MSMEs) in India.

The eligibility criteria for Udyam Registration are based on the investment, turnover, years of establishment, etc.

Once registered as an MSME, you can receive a unique Udyam Registration Number (URN) and a certificate that gives access to government schemes, subsidies, and incentives.

GST Registration

In India, Goods and Services Tax (GST) registration is mandatory for businesses meeting certain turnover thresholds, which is Rs. 40 Lakhs (for goods) and Rs. 20 Lakhs (for services) or engaging in specified activities.

Here's an overview of the process of obtaining GST registration, which is not exactly a license but a crucial registration for businesses:

• Access the official GST portal.
• Fill out the registration form with accurate details regarding your business activities, turnover, and so on.
• Furnish the necessary information, including business details, PAN, Aadhaar, bank account details, and relevant documents.
• Upon successful verification, you will be issued a unique Goods and Services Tax Identification Number (GSTIN)- a 15-digit unique identifier for the businesses under the GST regime.

Professional Tax Registration

Professional Tax Registration is a requirement for employers and individuals engaged in certain professions, trades, or employment in India. It is a state-level tax levied by the respective State Governments for the welfare of professionals and workers in various sectors.

In some states like Maharashtra, obtaining professional tax registration is mandatory.

Shops and Establishment License

The Shops and Establishment License is a mandatory requirement for businesses operating within a specific jurisdiction, typically at the state level, in India. It is governed by the respective state Shops and Establishment Act and its rules, which vary slightly across different states.

The primary purpose of the Shops and Establishment License is to regulate the operations of shops, commercial establishments, and other businesses within a state with provisions related to-

• Working hours
• Welfare and safety of employees
• Employment practices

The Shops and Establishment License is usually valid for a specific period, after which it needs to be renewed to continue operating legally. A valid Shops and Establishment License is often required for various business activities, including obtaining other licenses, permits, or registrations.

Trade License

A trade license is a legal permit issued by the local municipal authority or council that authorizes your business to engage in specific commercial activities within a designated area or jurisdiction.
Trade licenses specify the types of commercial activities that a business is permitted to undertake. These activities may include manufacturing, trading, storage, distribution, or provision of certain services, depending on the nature of the business and local regulations.

In order to obtain a Trade license, you must submit an application to the local municipal authority or council responsible for issuing licenses. The application process typically requires businesses to provide certain documents, such as -

• Proof of identity,
• Address proof,
• Proof of ownership or tenancy of the premises
• Approvals and NOCs (No Objection Certificates) from relevant authorities

Once the application is approved and all requirements are met, the local authorities will issue the trade license to your business, specifying the permitted activities, duration of validity, and any conditions or restrictions.

Labour License

Labour licenses, also known as labour permits or labour registrations, are legal authorizations issued by government authorities (Shram Suvidha Portal) to businesses, particularly those employing a significant number of workers, to ensure compliance with labour laws and regulations.

It safeguards the rights and interests of workers by setting standards for fair treatment, safe working conditions, and adequate remuneration. These licenses often require businesses to adhere to minimum wage laws, working hour restrictions, overtime compensation, leave entitlements, and other labour standards aimed at promoting employee well-being.

The process of obtaining a labour license may vary depending on the jurisdiction and the specific requirements imposed by labour laws and regulations.

Food Safety and Standards Authority of India (FSSAI) License

The Food Safety and Standards Authority of India (FSSAI) license, commonly referred to as the FSSAI license, is a mandatory requirement for businesses involved in the manufacturing, processing, packaging, storage, distribution, and sale of food products in India.

Obtaining an FSSAI license is a legal requirement for food businesses operating in India. It is mandated by the Food Safety and Standards Act of 2006, and non-compliance can result in penalties, fines, or even closure of the business.

Depending on the scale and nature of the business, there are different types of FSSAI licenses, such as Basic Registration, State License, and Central License, each catering to specific business activities and turnover thresholds.

Import-Export License

An import-export license, also known as an import-export permit, is a legal authorization issued by government authorities that allows businesses to engage in the importation and/or exportation of goods across international borders.

An Importer Exporter Code is mandatory for the export and import of goods. It is a 10-digit identification number that is compulsory for the purpose of exporting from India as well as for the purpose of importing to India. It has lifetime validity.

The process to obtain an Import Export Code (IEC) registration certificate online involves several steps, as outlined below:

• Fill out the Application Form.
• Gather the necessary documents as per the requirements specified.
  • For Private Limited/ LLPs- Company PAN Card, Incorporation Certificate, Aadhar Card, PAN Card of all Directors/Partners, and Cancelled Cheque of the Company.
  • For Partnerships- Partnership Firm PAN Card, Partnership Deed, Aadhar Card, PAN Card of all Partners, and Cancelled Cheque of the Partnership Firm.
• Pay the required Fees.
• Upon successful verification and processing, the Import Export Code (IEC) registration certificate will be issued. You will receive the certificate electronically using the registered email ID provided during the application process.

While we covered some common licenses necessary for businesses in India, certain industry-specific licenses and permits exist that are crucial for compliance with sector-specific laws, regulations, and standards. These can vary widely depending on the nature of the industry, the type of activities involved, and the potential risks or impacts associated with the operations.

Business Registration with Razorpay Rize

To conclude, securing these licenses is crucial for the seamless operation of your business. However, it's essential to prioritize registering your business as a legal entity beforehand, as this step is often a prerequisite for applying for most of these licenses.

Razorpay Rize simplifies this fundamental yet vital aspect of the process with its online company registration services. To learn more about how Razorpay Rize can assist you, click below.

{{business-cta}}

‍

*Prices and documents can differ based on the company type.

Registration as a Joint Venture in India

Setting up a joint venture in India involves formal collaboration between two or more parties, combining resources, capital, and expertise to achieve a shared business objective. JVs can be formed in two primary structures:

• Incorporated Joint Ventures (via a company or LLP)
• Unincorporated/Contractual Joint Ventures

To register a joint venture in India, the following key legal steps must be followed:

1. Choose the type of entity. It can be company (Private or Public), Limited Liability Partnership (LLP), or Contractual Agreement
2. Draft a joint venture agreement, outlining roles, responsibilities, profit-sharing, management structure, and exit clauses
3. Obtain regulatory approvals, including those under FDI norms, if applicable
4. Register the entity with the Ministry of Corporate Affairs (MCA) or relevant authority

A joint venture enables both Indian and foreign parties to leverage each other’s market presence, networks, and operational strengths, making it a highly strategic mode of business entry.

Types of Joint Ventures in India

India allows for two major forms of joint ventures, based on the nature of the partnership:

1. Equity-Based Joint Ventures

These involve the creation of a new legal entity or partnership where both parties invest capital and own equity shares.
Ideal For:

• Manufacturing collaborations
• Retail expansion (e.g., Walmart-Flipkart)
• Technology co-development

2. Contractual Joint Ventures

In this structure, parties enter into a legally binding agreement without forming a new entity.
Ideal For:

• Project-based collaborations
• Service agreements or licensing deals
• Research and development partnerships

Joint Venture Registration in India in the Form of Corporate Entity

There are two ways to form a corporate JV in India:

1. Incorporating a New Company

A new company is registered with shared ownership among JV partners. This is the preferred method as it offers full flexibility in defining the shareholding, governance, and structure.

2. Collaborating with an Existing Company

Here, one party acquires equity in an existing Indian company, forming the JV. While faster, this option may involve challenges in aligning with the existing company's operations or culture.

Both forms require:

• DIN and DSC for directors
• Name approval from MCA
• Filing incorporation forms (SPICe+)
• Drafting MoA and AoA reflecting JV terms

Joint Venture Registration in India in the Form of Limited Liability Partnership

An LLP-based JV offers the benefits of limited liability with simpler compliance norms.

Two Methods:

1. Incorporating a New LLP
   
   • Partners bring in capital and expertise
   • Requires LLP Agreement, DPINs, DSCs, and MCA registration
     
     
2. Transferring Stake in an Existing LLP
   
   • One partner joins an existing LLP and receives a stake
   • Involves amending the LLP Agreement and notifying the ROC

LLPs are ideal for service-based sectors or small-scale collaborations where flexible operations and tax efficiency are priorities.

Joint Venture Registration in India in the Form of Contractual Agreement

In this setup, no new entity is created. Instead, parties sign a detailed JV agreement outlining:

• Objectives and Scope
• Capital Contribution or Resource Sharing
• Governance and Management Roles
• Duration of Partnership
• Termination and Dispute Resolution Clauses

This model works well in infrastructure projects, technology licensing, or temporary business collaborations. Legal enforceability is key, and such agreements must be vetted thoroughly to avoid ambiguities.

Advantages of Joint Ventures

Joint ventures offer several strategic advantages for U.S. businesses entering India:

• Market Access
• Local Expertise
• Shared Risk and Resources
• FDI Compliance
• Faster Market Entry

Do’s and Don’ts While Entering into a Joint Venture

Do’s

• Conduct in-depth due diligence on potential partners
• Align on strategic goals and exit options early on
• Involve experienced legal and tax advisors
• Keep open lines of communication and reporting
• Clearly define IP ownership and dispute resolution processes

Don’ts

• Don’t rush into agreements without thorough partner vetting
• Don’t rely solely on verbal understandings- document everything
• Don’t ignore cultural and operational differences
• Don’t overlook local compliance, especially with FDI and tax laws
• Don’t neglect exit planning, even in early discussions

Steps Involved in Registration of Joint Venture Agreement

1. Identify and Evaluate JV Partner
2. Conduct Feasibility Study and Risk Assessment
3. Draft a Joint Venture Agreement (with roles, capital, IP, and exit terms)
4. Choose Legal Structure (Company, LLP, or Contractual)
5. Register Entity with MCA or execute agreement
6. Obtain FDI and Regulatory Approvals if required
7. Open Bank Accounts and Apply for PAN/GST
8. Set Up Governance Mechanisms and Operational Controls

Documents Required to Register a Joint Venture Agreement

For U.S. businesses registering a JV in India, the following documents are typically required:

• Joint Venture Agreement
• Charter Documents (MoA and AoA or LLP Agreement)
• ID and Address Proofs of foreign directors/partners
• Board Resolutions from each party approving the JV
• FDI Approval Letters (if under approval route)
• Digital Signature Certificates (DSC) for filings
• Director Identification Numbers (DIN) for Indian company directors
• No Objection Certificates (NOCs) from existing stakeholders, if applicable
• Registered Office Proof and rental/lease agreements in India

Challenges in Setting Up a Joint Venture in India

While JVs offer immense opportunities, foreign companies may face the following challenges:

• Regulatory Complexity
• Cultural Differences
• Misaligned Goals
• IP Protection Issues.
• Exit Complications 

Frequently Asked Questions (FAQs)

‍

FSSAI Registration

FSSAI Registration is the basic license issued to small-scale food businesses by the state food safety authorities. It applies primarily to small food business operators (FBOs) whose turnover falls below a certain threshold and who operate within a single state.

This registration is essential to legally operate a food business and ensures compliance with food safety norms. However, for larger businesses or those operating across multiple states, an upgraded license (State or Central License) is required.

Food Business Operators Who Need FSSAI Registration?

The following food businesses typically require FSSAI Registration:

• Small Manufacturers: Small-scale producers of food items with limited turnover.
  
• Transporters: Entities involved in the transportation of food within the state.
  Retailers: Small shops, grocery stores, or vendors selling food products directly to consumers.
  
• Small Food Businesses: Street food vendors, hawkers, or home-based food businesses.
  
• Medium Food Businesses: Hotels, Restaurants & Bars
  

Types of FSSAI Registration

Beyond legal compliance, filing ITR offers several advantages:

Benefits of Obtaining an FSSAI Food License

Obtaining an FSSAI license offers multiple advantages:

• Consumer Trust: Shows commitment to food safety, increasing customer confidence.
  
• Legal Compliance: Avoids penalties and legal issues by following regulations.
  
• Business Expansion: Facilitates scaling operations across states and international markets.
  
• Brand Credibility: Enhances brand image by adhering to recognised safety standards.
  
• Access to New Markets: Many retailers and e-commerce platforms require FSSAI certification.
  

{{company-reg-cta}}

FSSAI Registration Eligibility

Below is the eligibility criteria for FSSAI registration:

• Annual turnover up to ₹12 lakhs.
  
• Operates only within a single state.
  
• Includes small-scale manufacturers, traders, retailers, hawkers, and temporary stall owners.
  

FSSAI License Eligibility

Businesses requiring State or Central Licenses typically fulfil these conditions:

• Annual turnover between ₹12 lakhs and ₹20 Crores (State License).
  
• Annual turnover exceeding ₹20 crores (Central License).
  
• Operations across multiple states or involved in import/export.
  
• Large-scale food processors and manufacturers.
  

Food Capacity Limit Required for Obtaining FSSAI Registration

Note: These limits may vary based on specific food categories and local regulations.

Documents Required for Obtaining the FSSAI Registration/License

Common documents needed include:

• Identity Proof (Aadhar, PAN Card)
  
• Address Proof of Business Premises (Rent Agreement/Utility Bill)
  
• Passport-sized Photographs of the Applicant
  
• Certificate of Incorporation (for companies)
  
• Food Safety Management Plan or Statement of Food Products
  
• NOC from the local municipality or health department
  
• Proof of possession of premises (ownership or lease)
  

How to Apply for FSSAI Registration Online?

Applying for an FSSAI Registration or License online is a straightforward process — and the best part is, you can do it all from the comfort of your home or office.

Step 1: Visit the Official FSSAI Website

Head over to the official Food Safety Compliance System (FoSCoS) portal: https://foodlicensing.fssai.gov.in

Step 2: Create an Account

Click on “Sign Up” and fill in your details like name, mobile number, email ID, and state of operation. Once registered, you’ll receive login credentials via email or phone.

Step 3: Fill in the Application Form

After logging in, choose the appropriate license type based on your business size and turnover (Basic, State, or Central). Then, fill in the required details such as:

• Business name and address
  
• Type of food business (manufacturer, distributor, caterer, etc.)
  
• Contact information
  
• Business turnover and food handling capacity
  

Step 4: Upload Required Documents

Upload scanned copies of all the necessary documents.

Step 5: Pay the Application Fee

Once the form is complete and documents are uploaded, proceed to pay the applicable fee online. The amount depends on the license type and duration selected (1–5 years).

Step 6: Submit the Application

Double-check all details before clicking “Submit”. Once submitted, you’ll receive an application reference number which you can use to track your status.

Step 7: Track Your Application Status

Use the “Track Application” feature on the dashboard to monitor progress. You’ll receive notifications if additional info or documents are required.

Once submitted, your application will be reviewed by the local food safety officer. They may conduct a physical inspection (for licenses) or approve the application directly (for Basic Registrations). Upon approval, you’ll receive your FSSAI certificate online.

FSSAI License Cost & Validity

Costs may vary based on license duration and type.

FSSAI Registration Status

How to Check Status:

1. Visit the FSSAI portal.
   
2. Log in using registered credentials.
   
3. Navigate to the “Application Status” section.
   
4. Enter your Application/Registration number.
   
5. View the current status (Pending, Approved, Rejected).
   

FSSAI Penalty and Offences

The Food Safety and Standards Authority of India (FSSAI) takes food safety very seriously — and rightly so. Non-compliance can lead to hefty penalties, legal action, or even imprisonment, depending on the nature and severity of the offense.

Here’s a breakdown of common offences under the Food Safety and Standards Act, 2006, and their corresponding penalties:

Renewal of FSSAI License

Renew your license at least 30 days before it expires. The process is similar to applying for a fresh — just log in, fill out renewal forms, upload updated documents, and pay the fees. Missing renewal deadlines can lead to fines or even suspension of your license.

FSSAI License for Cloud Kitchen

Cloud kitchens, operating without a physical dine-in space, are also required to obtain FSSAI licenses. Typically, they fall under:

• Basic Registration: If turnover and scale are small.
  State License: For larger cloud kitchens with higher turnover.
  

The application process is the same, focusing on food safety management specific to cloud kitchens.

Conclusion

FSSAI registration and licensing are essential for any food business in India. They help keep your customers safe, build your brand, and keep you on the right side of the law.

So, if you're running any kind of food business, be it a small catering outfit, a packaged snack brand, or an export-oriented manufacturing unit, FSSAI must be part of your growth strategy. It’s a small step toward compliance, ensuring that you’re meeting the highest standards of food safety and hygiene.

Frequently Asked Questions