* Exclusive of Taxes
Any entrepreneur looking to start a food business – packaging, processing, distribution, etc have to obtain a valid Food Safety and Standard Authority of India license. FSSAI monitors these businesses under the guidelines and regulations listed in FSSAI Act 2006.
The tourism industry is concerned with people travelling for business or pleasure purposes, staying in their destination for at least one night, and then returning. By contrast, the travel industry has a wider scope, covering more travel purposes and durations.
To open a hotel, there are various licenses that are required to be obtained. Such licenses include:
The first head of laws that govern the hotel industry include the laws regarding commissioning and construction of hotels, restaurants, guest houses and other establishments of such kind. These laws also include laws such as Foreign Exchange Management Act, Industrial Licensing Policies, and land laws, etc. Hotel insurance policies, especially the customized ones can fulfil the growing needs of the hotel industry. It can cover all its establishments ranging from spa to guest houses and apartments, bed and breakfasts, etc. Other insurance policies such as the standard insurance policy would cover risks and damages arising from accidents, fire, natural calamity, etc.
The second head of laws that govern the working of hotel industry is related to matters such as management, maintenance and the operational activities of hotels. Such laws include insurance laws, laws regarding safety and security of workers, food and hygiene standards, obtaining licenses, Food and Drug Administration Act, Shops and Establishment Act, etc. For example, Acts such as the Food Adulteration Act would prohibit the sale of substandard food items thereby protecting the customers from the potential harm caused by poisonous food and protecting their interest by eliminating the fraudulent practices.
The Food Safety and Standards Act would set up criteria for manufacture, storage, distribution and sale and trade of food substances so that they remain fit for human consumption for a considerable period.
The Legal Metrology Act would regulate the use of standards of weights and measures.
The Copyright Act would protect the rights relating to expression in the form of literature, drama, music, art or architectural works. In fact, hotels are required to take such copyright licenses before they organize any event such as plays or musical shows, etc.
The third set of laws that govern the working of a hotel are related to the contracts that it enters into with other enterprises or employment contracts, for example, the Apprentice Act, Employees State Insurance Act, etc. These laws also include the manner in which such entities are taxed.
Taxes may include income tax, service tax, expenditure tax, excise duty, luxury tax, entertainment tax, value added tax, etc. Legislations such as the Shops and Establishment Act or the Employees State Insurance Act would aim at regulating the relationship between employers and employees in the hotel. The former would lay certain statutory obligations on the employers in matters related to wages, work hours, holidays, paid leaves, provision for payment for overtime work, etc. The latter is a social security scheme that would mandate the employers to protect the interest of the workers in times of contingencies such as sickness, maternity leaves, physical impairment or injuries occurring from the workplace, subsequent medical care.
The Provident Fund Act mandates the creation of provident fund schemes for the employees. The Apprentices Act shall govern the working of apprentices in the Hotel Industry.
Other laws that may govern the working of hotels may include local law norms or other local land norms or guidelines issued by the tourism industry such as approval of hotels at project stage and classification & reclassification of hotels, guidelines for classification of heritage hotels, Time Share Resorts (TSR), Stand Alone Restaurants, guidelines for apartment hotels, guidelines for approval of guest houses, Hospitality Development and Promotion Board, implementing a transparent system for the effective monitoring of hotel projects, ensuring timely accrual of approvals / clearances / NOCs by the multiple agencies and facilitating the implementation of hotel projects, expeditious clearances, etc. will enable completion of hotel projects in time leading to enhancement of room availability for the tourists.
FHRAI is the voice of the Hospitality Industry and provides an interface between the Hospitality Industry, Political Leadership, Academics, International Associations and other Stake Holders.
Eastern Region comprising 12 States and a Union Territory, the association upholds common voice for hotels, restaurants and associates for unhindered progress of hospitality industry in the country’s Eastern Region.
Hotel and Restaurant Association of Northern India (HRANI) – a Northern outfit of FHRAI is an apex body representing Hotel & Restaurant Industry of the 9 North Indian States.
SIHRA constitutes the Southern Region of Federation of Hotel and Restaurant Associations of India (FHRAI), the Apex Trade Association for the Hospitality industry in India.SIHRA’s Membership comprises the smallest Restaurants to the Five Star deluxe Hotels in the Southern States of Andhra Pradesh, Telangana, Karnataka, Kerala, and Tamil Nadu and the Union Territory of Puducherry
Since February 1951, when the Hotel and Restaurant Association (Western India) was incorporated as a Company limited by guarantee and not having share capital, the Association has served the interests of the hotel and restaurant industry.The Association over the last several years has taken effective steps to encourage, promote and protect the interest of member establishments. It has been rendering professional assistance from time to time to all its members on topics of vital importance.
Hotel Association of India (HAI) is the apex organization of the Indian Hospitality industry. With its membership extending from the major hotel groups, boutique hotels, heritage hotels, large, medium sized and smaller hotels, it represents the entire spectrum of the industry.
Company or LLP have to comply post incorporation compliances.
Every business carrying out a taxable supply of goods or services and whose turnover exceeds the threshold limit is required to register as a normal taxable person. This process of registration is called GST registration. Entities without GST registration would not be allowed to collect GST from a customer or claim input tax credit of GST paid or could be penalised.
GST return filing is mandatory for all entities having GST registration, irrespective of business activity or sales or profitability during the return filing period.
The beauty of the system is that one has to manually enter details of one monthly return – GSTR-1. The other two returns – GSTR 2 & 3 will get auto-populated by deriving information from GSTR-1 filed by you and your vendors.
A fire safety certificate or permit is required for the Fire Department is a must for operating a hotel business. Fire safety certificate is usually provided if the building has incorporated proper fire prevention and fire safety measures as required under the relevant fire safety rules and regulations.
Hotels are public places that are monitored closely by the Police Department. Therefore, all hotels must maintain proper log of all Guests who have stayed at the hotel, follow relevant regulations and maintain a valid permit from the Police Department.
Employee Provident Fund (EPF) Registration is required for any establishment that employs more than 20 persons/employee in India. If any Hotel have more than 20 person/employees then EPF registration is mandatory.
Employees State Insurance (ESI) registration is mandatory in India for Businesses that employ 10 or more employees. To maintain compliance with the ESI Regulations, the employer must contribute 4.75% of the wages for all employees earning Rs.21,000 or less toward ESI employer dues. The employee is required to contribute 1.75% of his/her wagesas ESI dues.
Shop and Establishment is a subject matter of state to state. Different state has different Shop and establishment Act. The Shop and Establishment Act is regulated by the Department of Labour and regulates premises wherein any trade, business or profession is carried out.
The act not only regulates the working of commercial establishments, but also societies, charitable trusts, printing establishments, educational institutions run for gain and premises in which banking, insurance, stock or share brokerage is carried on.
If the hotel operates a bar or serves alcohol in the restaurants, a Bar license will be required from the relevant authorities. Bar license is usually provided by departments operating under the State Government. Hence, the requirement for bar license varies from state to state.
Food business license (FSSAI) under the Food Safety and Standard Act is required for operating a restaurant in India. The FSSAI food business license is usually provided for one year and is renewal at the end of each year.
Profession Tax is a tax levied on a person engaged in any profession, trade, calling and employment in India.
Other Law and regulations are also applicable on the hotel industry but applicability of other compliances is business to business of the Hotel.