Why it helps to understand the system first

Welcome to Part Seven. The core chapters of this book (Chapters 1 to 20) explain the practical work of opening and running a small restaurant, café or cloud kitchen (a kitchen that cooks only for delivery). They are written for readers in many countries, so they do not name laws, offices or fees. Part Seven does: it explains the rules in India, which office deals with each one, what it costs where the figure could be confirmed, and how to check the position for your address.

Many people expect one office to give them “the restaurant licence”. India does not work like that. A small restaurant needs several separate registrations and licences. Some come from the Central Government and are the same in every state, such as food safety registration and the Goods and Services Tax (GST). Some come from your state, such as registration under the state’s shops law, minimum wages and any liquor licence. And some come from your local body, such as the trade licence and the building permit.

New owners who do not understand this often lose time and money. They sign a rent agreement before checking that the building may be used as a restaurant, or they follow advice that is true in another state but not in theirs. You do not need to learn every law. You need a clear picture of the three levels, a rough idea of which level handles which subject, and a simple method for finding your own offices. With these you can ask the right people the right questions in the right order. That is a sure and secure path.

Money words used in Part Seven

All amounts in Part Seven are in Indian rupees (₹) and are real figures taken from official sources, not the story figures used in the core chapters. Indian amounts are grouped in a special way, and two words appear often:

• Lakh means one hundred thousand: ₹1 lakh = ₹1,00,000.
• Crore means ten million, or one hundred lakh: ₹1 crore = ₹1,00,00,000.
• The financial year runs from 1 April to 31 March. Most tax and licence rules count turnover and dates by the financial year.

Chapter I-11 lists these and the other Indian terms used in Part Seven.

The three levels

India is made up of states. Each state has its own government, its own laws on many subjects and its own departments. Below the state are the local self-government institutions, usually called local bodies: elected councils that run villages, towns and cities.

• In rural areas the local body is the grama panchayat (a village council). Above it are block panchayats and district panchayats.
• In towns the local body is the municipality, and in large cities it is the municipal corporation.

Your local body is often the first office you deal with, because the questions “May this building be used as a restaurant?” and “May I trade here?” are answered there.

What the Central Government handles

For a small restaurant, the main national rules are these. They apply in every state.

• Food safety. The Food Safety and Standards Act, 2006 is a national law. It is administered by the Food Safety and Standards Authority of India (FSSAI). Every food business needs either an FSSAI registration (for small businesses) or an FSSAI licence (for larger ones), applied for through FSSAI’s online system, FoSCoS. From 1 April 2026, a restaurant with a yearly turnover of up to ₹1.5 crore (₹1,50,00,000) needs only a registration (Chapter I-3).
• GST. A national tax shared between the Central Government and the states. Rates are recommended by the GST Council; the central side is run by the Central Board of Indirect Taxes and Customs (CBIC). Restaurant service is normally taxed at 5% without input tax credit (the right to deduct the GST you paid on your own purchases) (Chapter I-5).
• Income tax. Income tax is collected by the Income Tax Department under the Central Board of Direct Taxes (CBDT). A new law, the Income-tax Act, 2025, came into force on 1 April 2026 and replaced the Income-tax Act, 1961. Your PAN (Permanent Account Number, the income tax number of a person or business) and, if you must deduct tax from payments, your TAN (Tax Deduction and Collection Account Number) come from here (Chapters I-2 and I-5).
• Company law. Companies and limited liability partnerships (LLPs) are formed online through the Ministry of Corporate Affairs (MCA) (Chapter I-2).
• Labour law. Four national labour codes, on wages, industrial relations, social security and occupational safety, came into force on 21 November 2025, replacing 29 older central laws. Social security runs through the Employees’ Provident Fund Organisation (EPFO), for establishments with 20 or more employees, and the Employees’ State Insurance Corporation (ESIC), which covers shops, hotels and restaurants with 10 or more persons in the states that have extended the scheme to them (Chapter I-6).
• Small business registration. The Ministry of Micro, Small and Medium Enterprises (MSME) runs Udyam Registration, a free online registration for small businesses (Chapter I-2).
• Payments and lending. The Reserve Bank of India (RBI) regulates banks and digital payments. For example, from 1 April 2026 scheduled commercial banks may not accept collateral security (property or assets pledged against a loan) on loans of up to ₹20 lakh (₹20,00,000) to micro and small enterprises (Chapters I-9 and I-10).
• Consumer protection. The Central Consumer Protection Authority (CCPA) has issued guidelines that stop restaurants adding a service charge to the bill automatically (Chapter I-5).
• Waste. Under the Solid Waste Management Rules, 2026, in force from 1 April 2026, waste must be separated into four streams (wet, dry, sanitary and special care), and local bodies may charge user fees. Large “bulk” waste generators, such as those producing 100 kg or more of waste a day, must process wet (food) waste on site as far as possible. In hilly areas and on islands, hotels and restaurants must process their wet waste locally, following state pollution control board norms (Chapter I-4).

What the states handle

Many rules that touch a restaurant are made by each state, with its own law, department, forms and fees: the shops and establishments law (registering your establishment, working hours, holidays and leave); minimum wages; the detailed rules under the labour codes, for which the state is generally the “appropriate government” for shops and restaurants; professional tax (a small tax on employment and trades), in the states that charge it; liquor, under each state’s own excise law and policy; pollution control categories, set by each state pollution control board (Kerala’s rules refer, for example, to the board’s Red category); fire safety, building rules, stamp duty and rent law; and the registration of partnership firms. Under the Code on Wages, no state may set minimum wages below a national floor wage, but no floor wage amount had been found when this chapter was checked. A legal tracker reported in May 2026 that Kerala had only draft rules under the labour codes, and no final Kerala rules had been found when this chapter was checked (Chapter I-6).

What local bodies handle

Your grama panchayat, municipality or municipal corporation usually deals with the trade licence for your business at your premises; building permits and any permit to change the use of a building; property tax; and the collection of waste and the user fees for it. In Kerala, professional tax is also reported to be paid to the local body.

Which level usually handles what

The table below is a starting map, not a complete list. The split differs between states, and between rural and urban areas.

Subject	Level that usually handles it	In Kerala	Chapter
Business structure: firm, LLP or company	State (partnership firms); Central (LLPs and companies, through the MCA)	Partnership firms register online with the Registration Department	I-2
Food safety registration or licence	Central law (FSSAI), with food safety officers in each state	News reports describe extra Kerala orders, for example on health cards for food handlers	I-3
Trade licence for the premises	Local body	A licence from the panchayat or municipality, often called the D&O licence (Dangerous and Offensive trades licence)	I-4
Building permit and change of use	Local body, under state building rules	Kerala Panchayat Building Rules and Kerala Municipality Building Rules; the panchayat rules (Rule 4(3)) say a permit is needed before changing a building’s occupancy (use)	I-4, I-7
Shops and establishments registration	State labour department	Kerala Shops and Commercial Establishments Act, 1960, through the Labour Commissionerate	I-2, I-6
GST	Central and state, one shared system	Registration needed above ₹20 lakh (₹20,00,000) of turnover	I-5
Minimum wages and hours	State, within the national labour codes	Restaurants come under the shops and commercial establishments minimum wage notification (Category D, “Hotel, Canteen, Restaurant”); a revision was in draft in 2026	I-6
Liquor	State excise department	Kerala Excise Department; its published fee list ties the beer and wine parlour licence to star-rated hotels, classified restaurants and outlets of the state and national tourism development corporations	I-4
Pollution control, waste and fire safety	State pollution control board and fire service; local body for waste collection	Kerala State Pollution Control Board (KSPCB); Kerala Fire and Rescue Services, whose involvement depends under the building rules on the building’s occupancy group and size	I-4
Leases, stamp duty and rent law	Central law on registering leases; state stamp duty and rent law	Kerala stamp duty rates, published by the Registration Department; Kerala Buildings (Lease and Rent Control) Act, 1965	I-7

Kerala as the worked example

Part Seven uses one state, Kerala, as its worked example, and describes its laws, departments and local bodies in detail. This does not mean Kerala’s rules are typical, or that they apply anywhere else. If you are opening in another state, use the Kerala examples to see what kind of rule to look for, then find your own state’s version (section I-1.7).

Kerala’s local bodies

Kerala’s Local Self Government Department lists 941 grama panchayats, 152 block panchayats, 14 district panchayats, 87 municipalities and 6 municipal corporations: 1,200 local bodies in all. For a restaurant, the body that matters most is the one for your exact address: the grama panchayat if you are in a rural area, or the municipality or municipal corporation if you are in a town or city. The state department responsible for local bodies is the Local Self Government Department (LSGD).

K-SMART: Kerala’s online system for local bodies

Kerala’s local bodies now offer many services through an online system called K-SMART. According to published reports, it was developed by the Information Kerala Mission for the LSGD, started in the cities and towns on 1 January 2024 and was extended to all panchayats in April 2025. The services reported include building permits, payment of property tax and professional tax, business and trade licensing, and a “Know Your Land” service that shows planning information about a plot. The official K-SMART pages could not be read for this book, so confirm with your local body which services you can use online and which still need a visit to the office.

The usual order of steps

The order matters, because many approvals depend on earlier ones. In Kerala, for example, the Labour Commissionerate’s list of documents for registering your establishment includes a copy of your local body licence, and a licensing consultant’s guide reports that the trade licence application asks for papers about the building, such as the owner’s consent and the current property tax receipt. The list below is the usual order; yours may differ, and several steps overlap.

1. Get advice and choose a structure. Talk to a chartered accountant, choose a structure, get your PAN and register your firm, LLP or company if you need to (Chapter I-2).
2. Before you sign a rent agreement, check the building with the local body. In Kerala, the Kerala Panchayat Building Rules, 2019 (Rule 4(3)) say that nobody may change the occupancy (use) of a building from one group to another without first getting a permit from the Secretary of the panchayat; in towns and cities the municipal building rules apply, so ask the municipality or corporation. Ask whether the building may be used as a restaurant, whether a change of occupancy permit is needed, and whether the building has the papers the trade licence will need (Chapters I-4 and I-7).
3. Check the other approvals the building needs: fire safety, which in Kerala depends on the building’s occupancy group and size, and the category the state pollution control board gives restaurants (Chapter I-4).
4. Sign the rent agreement, register it and pay stamp duty where required, then carry out the building work with any permits needed (Chapters I-4 and I-7).
5. Apply for the local body trade licence. In Kerala, a published copy of the panchayat licensing rules gives seven days to issue it once the required clearances and fee are in; ask your local body how long it takes in practice (Chapter I-4).
6. Apply for your FSSAI registration or licence on FoSCoS before you start selling food. The rules give seven days to deal with a registration and 60 days for a licence (Chapter I-3).
7. Register under the state shops law (in Kerala, within 60 days of starting), and register for GST when required (Chapters I-2, I-5 and I-6).
8. Before your first employee starts, learn the minimum wages and the hours rules for your state, prepare appointment letters, and register with ESIC and EPFO when your staff numbers reach their limits (Chapter I-6).
9. Apply for a liquor licence, if you need one and can get one, once the approvals it depends on are in place (Chapter I-4).

Chapter I-12 brings all the steps together with timings.

Online services and free official help

India has several official online services that bring approvals together. Use them, but treat each as a starting point: none of them covers every licence a restaurant needs.

• K-SWIFT (Kerala). Under the Kerala Micro Small Medium Enterprises Facilitation Rules, 2020, published on the K-SWIFT website, an enterprise outside the pollution board’s Red category may file a self-certification. The certificate exempts it for three years from certain approvals listed in the Rules, including some under the Kerala Panchayat Raj Act, the Kerala Municipality Act and the building rules, and from the inspections linked to them. The fee is 0.01% of the project cost, not counting land. Restaurants are not named in the Rules, so ask whether a restaurant can use this route before you rely on it. It does not replace national rules such as food safety and GST.
• SPICe+ and FiLLiP (MCA). The MCA’s online forms for forming a company or an LLP also give you a PAN and TAN at the same time (Chapter I-2).
• Udyam Registration (MSME). Free, online and based on your Aadhaar number (India’s identity number). Some loan and support schemes ask for it (Chapters I-2 and I-9).
• FoSCoS (FSSAI). Shows which kind of FSSAI registration or licence fits your business and its fee (Chapter I-3).
• National Single Window System (NSWS). A national portal for business approvals. What it offers for a small restaurant could not be confirmed for this book.
• Kerala Labour Department call centre: 1800 42555 214, for questions on registration under the shops law and other labour matters.

Duties that apply to almost every business

Some duties apply to almost every restaurant in India, whatever its size:

• Hold a valid FSSAI registration or licence before you sell food, display it, and print its 14-digit number on your bills (Chapter I-3).
• Hold and renew the licences your local body requires for your premises (Chapter I-4), and register under your state’s shops law (Chapters I-2 and I-6).
• Register for GST once your turnover passes the limit: ₹20 lakh in Kerala and most states, ₹10 lakh in Manipur, Mizoram, Nagaland and Tripura. Sales through delivery apps count towards your turnover. GST you collect is not your money; you hold it for the government (Chapter I-5).
• Pay income tax on your profits in the way your structure requires (Chapters I-2 and I-5).
• Follow employer rules from the day you hire: at least the minimum wage, appointment letters, wage slips and the required registers (Chapter I-6).
• Never add a service charge to the bill by default; under the CCPA guidelines it must be voluntary (Chapter I-5).
• Separate your waste and pay the collection fees your local body sets (Chapter I-4).

Checking the rules where you are

Because the rules depend on your exact address, the most useful skill in Part Seven is knowing how to find your own. Here is a method that works in any state.

Step 1: Confirm which governments cover your address

Write down your state, your district, and the grama panchayat, municipality or municipal corporation (and ward) that covers the building. The building’s property tax receipt shows which local body collects its tax.

Step 2: Find your state’s version of each rule

Each state names its laws and departments differently. Search your state government’s and labour department’s websites for terms such as “shops and establishments registration”, “minimum wages notification”, “professional tax”, “trade licence”, “excise licence” and “pollution control board categories”. Some examples show how much states differ:

• Delhi: the shops and establishments registration number can be issued through the MCA’s company formation form, SPICe+. News reports also say that since mid-2025 Delhi restaurants no longer need a Delhi Police licence, and that this licensing passed to the local bodies.
• Karnataka: a February 2024 notification is reported to require name boards of commercial establishments, including hotels, to be 60% in Kannada. No similar rule for private shops was found for Kerala.
• Professional tax: some states charge it and some do not; Delhi, for example, is reported not to charge it.
• Liquor: some states, such as Bihar and Gujarat, are reported to prohibit the sale of alcohol.

Step 3: Make a list of the offices to contact

Use the rows of Worksheet I-1.1 as your list: for most restaurants, the local body, the state labour office, the food safety officer for your area, the fire service, the pollution control board, the registration office, a GST professional, the excise office if you hope to serve alcohol, and your accountant.

Step 4: Ask good questions

When you contact each office, have your address and a short description of your business ready (for example, “a 40-seat vegetarian restaurant with no alcohol” or “a delivery-only kitchen with no customers on site”). Then ask:

• What licences, registrations, permits or certificates do I need from you for this business at this address?
• Which documents must I send, and is there a checklist or an online form?
• Must you approve anything before building work starts?
• How long does approval usually take at the moment?
• What is the official fee, how do I pay it, and when is it due again?
• Will an officer inspect the premises, and when?
• Which other offices must approve me before you can, or after you do?

Ask for answers in writing where you can, or send a short email confirming what you were told, and keep it with Worksheet I-1.1.

How Part Seven is arranged

Part Seven has twelve chapters. The core tells you how to do something well; Part Seven tells you what the law in India requires, how it works in Kerala, and how to check your own position.

Chapter	What it covers	Read it with
I-1 How the Rules Work in India	The three levels of government, the main bodies, Kerala as the worked example, the order of steps, single windows, finding your local rules	Chapter 1
I-2 Your Business Structure	Sole proprietorship, partnership firm, LLP and company; PAN and TAN; Udyam Registration; shops and establishments registration; names and trade marks	Chapters 2 and 4
I-3 FSSAI Registration or Licence	Which registration or licence you need, fees, FoSCoS, hygiene rules, food handler training and health checks, inspections and penalties, Kerala orders	Chapters 3, 9 and 12
I-4 Other Licences and Permissions	The local body trade licence, building and change of use, fire safety, pollution control and waste, liquor, gas cylinders, signs, music, smoking, trade marks	Chapters 5, 8, 10 and 15
I-5 GST and Other Taxes	GST on restaurant service, registration, the composition scheme, returns, service charge, income tax, tax deducted at source, professional tax	Chapters 7, 16 and 17
I-6 Employing Staff in India	The four labour codes, Kerala minimum wages, hours, holidays and leave, EPF and ESI, bonus and gratuity, young workers, migrant workers, ending employment	Chapter 13
I-7 Premises and Leases	Registering a lease, Kerala stamp duty, Kerala rent law, what to check before you sign	Chapter 5
I-8 Typical Costs in India	Real cost levels for wages, electricity, gas, water and licences, to compare with your own quotes	Chapters 16 and 17
I-9 Funding in India	Mudra loans, collateral-free bank loans, credit guarantees, PMEGP and Kerala schemes	Chapter 16
I-10 Delivery Apps and Digital Payments	Delivery apps and their terms, GST on app orders, ONDC, UPI and card payments and their fees	Chapters 7 and 15
I-11 Indian Terms and Money	A glossary of the Indian terms used in Part Seven	Any chapter
I-12 The India Master Checklist and Timeline	Every step in order, with timings	Chapter 19

How each chapter is written

Every chapter gives the national rules; the Kerala rules in detail; how other states differ, with labelled examples that are never a complete list; and how to find and check the rule where you are. Where a fact could not be confirmed from an official source, the chapter says so. Read a core chapter first; where it says the rules depend on your country, it sends you here. Note each legal step and office in your plan, with time for approvals, and check the official pages before you act.

How to keep up to date

Indian rules have changed a great deal in the last two years, at every level. In the eighteen months before this chapter was checked, for example:

• 1 April 2025: the limits for micro, small and medium enterprises under Udyam were raised (Chapter I-2).
• 22 September 2025: GST rates were restructured. The rate for ordinary restaurant service stayed at 5% without input tax credit. In the same month, Notification No. 15/2025-Central Tax (Rate) made clear that a stand-alone restaurant cannot choose the 18% rate with input tax credit (Chapter I-5).
• 21 November 2025: the four labour codes came into force. Kerala’s own rules under them were reported to be still in draft (Chapter I-6).
• February 2026: Kerala published a draft revision of minimum wages for shops and commercial establishments, including hotels, canteens and restaurants (Kerala Gazette Extraordinary No. 482, 5 February 2026). The Labour Commissionerate’s list showed it only as a preliminary notification on 4 October 2026 (Chapter I-6).
• March and April 2026: FSSAI registrations and licences issued from 1 April 2026 no longer need renewal (rules notified on 10 March 2026), and new FSSAI turnover limits took effect on 1 April 2026 (Chapter I-3). Also on 1 April 2026, the Income-tax Act, 2025 came into force (Chapter I-5); the Solid Waste Management Rules, 2026 took effect (Chapter I-4); and the collateral-free limit for small business loans rose to ₹20 lakh (Chapter I-9).

More changes are announced. The Government and the National Payments Corporation of India (NPCI) announced in September 2026 that from 15 October 2026 a merchant discount rate (MDR, a fee paid by the business, not the customer) of 0.4% will apply to UPI payments to merchants above ₹2,000, capped at ₹300 for payments of ₹75,000 or more. Payments of up to ₹2,000 stay free, and small sellers who receive up to ₹1 lakh a month through UPI QR codes directly into their own personal bank accounts are exempt; ask your bank whether this applies to your business account. News reports say a challenge is before the Supreme Court, which did not stop the start date. Ask your bank or payment provider (Chapter I-10). Announced changes can themselves change before they take effect.

These habits will keep you on a sure and secure path:

• Use official pages (FSSAI, CBIC and the GST portal, the Income Tax Department, the MCA, your state departments and your local body), and check the date on them. Blogs, forums and agents’ pages are often out of date or written for another state.
• Watch the start of the financial year. Many changes, including several above, take effect on 1 April.
• Ask your chartered accountant at least once a year: “Has anything changed that affects my business?”
• Review once a year. Chapter 20 suggests a yearly review of your business. Add a check of your registrations, licences, renewal dates and insurance, and update Worksheet I-1.1.