Setting Up of Business, Industrial and Labour Laws · Identifying Laws applicable to various Industries and their Initial Compliances

Business Registrations and Licences for Starting a Business in India

Updated 11 October 2026 · Fact-checked

Business registrations and licences are the approvals a new business must obtain before or soon after it starts. They depend on its entity type, activity, turnover, location, staff and trade. To answer an exam question, identify the facts, match each to a registration, state the authority and trigger, then conclude.

Understand Business Registrations and Licences

A business does not need one single licence. It needs a set of registrations. Some apply to every business, such as PAN. Some apply only when a trigger is met, such as GST on crossing a turnover limit or IEC on importing or exporting. Some apply only to a particular activity, such as FSSAI for food.

Think of the registrations in groups. Identity and tax: PAN (a permanent account number for income tax) and TAN (a tax deduction and collection account number, needed by anyone who deducts or collects tax at source). Indirect tax: GST registration. Status and support: Udyam registration, which is a voluntary online registration for micro, small and medium enterprises. Local and labour: Shops and Establishment registration under the State law, professional tax enrolment under State law, and EPF and ESI where the staff-number and wage conditions are met. Trade and activity: FSSAI for food businesses and IEC for import and export.

The key skill is to read the facts and ask what each fact triggers. A company needs PAN because it is a taxpayer. If it deducts tax from salary or payments, it needs TAN. If it sells goods or services above the threshold, or makes inter-State supplies where registration is required, it must consider GST. If it hires staff in a shop or office, the State Shops and Establishment law applies. If it makes or sells food, FSSAI applies.

Many rules differ from State to State, such as Shops and Establishment requirements and professional tax rates. Central rules are the same across India. In the exam, say which authority grants the registration and do not quote a figure you are unsure of. Name the registration, the authority, the trigger and the consequence of not having it.

Key rules to remember

PAN: Issued by the Income Tax Department; a 10-character alphanumeric number; Needed for tax filing, opening bank accounts and most other registrations. Every company and LLP needs one.
TAN: Needed by a person who deducts or collects tax at source; a 10-character alphanumeric number; Quote TAN in TDS and TCS returns and challans. PAN and TAN are different things.
GST registration trigger: Register if aggregate turnover exceeds the threshold for the State and type of supply, or if the law requires registration regardless of turnover; Do not quote one fixed limit for all cases. Say that compulsory categories, such as certain inter-State supplies of goods, need registration irrespective of turnover.
Udyam registration: Online, based on self-declaration, using Aadhaar of the proprietor, managing partner or authorised signatory; PAN is linked, and GST details are linked where the enterprise is GST-registered or liable to register; Voluntary. It gives a certificate and a permanent number. Classification depends on investment and turnover under the MSMED Act.
Shops and Establishment: Registration or intimation under the State Act, within the time set by that State; Applies to shops, offices and commercial establishments. Conditions vary by State.
FSSAI: Registration or licence under the Food Safety and Standards Act, 2006, depending on the size of the food business; Small businesses get basic registration. Larger ones need a State or Central licence.
IEC: Import Export Code issued by the Directorate General of Foreign Trade (DGFT); Generally mandatory to import or export goods as a business. For services it is generally not required, unless the exporter wants to claim benefits under the Foreign Trade Policy. Some exceptions apply, so state the general rule.
Professional tax: Levied by the State; employer registers and deducts from salary, and persons in trade also enrol; Not levied in every State. The rates and slabs are State specific.

How to solve Business Registrations and Licences questions

Use this method for any question that gives a business and asks which registrations or licences are needed.

1Identify the entity type: sole proprietor, partnership, LLP or company. This decides the PAN and the incorporation documents.
2List the activities: sale of goods, services, food, import or export, manufacturing. Each activity can trigger a separate registration.
3Note the numbers in the facts: turnover, number of employees, wage level, investment. These are the triggers.
4Match each fact to a registration: PAN, TAN, GST, Udyam, Shops and Establishment, FSSAI, IEC, professional tax, EPF or ESI.
5Name the authority that grants each one, such as the Income Tax Department, the GST portal, DGFT, FSSAI or the State labour department.
6Separate mandatory registrations from voluntary ones. Udyam is voluntary, but it brings benefits.
7Mention the consequence of non-compliance, such as penalty, interest or inability to operate.
8Close with a clear conclusion that lists the registrations needed.

Quickest way: Trigger-Authority-Conclusion list

When to use it: Use this in short-answer questions or when time is tight.

Write the headings: Tax, Status, Local, Activity.
Under Tax put PAN, TAN and GST. Under Status put Udyam. Under Local put Shops and Establishment and professional tax. Under Activity put FSSAI and IEC.
Tick only those the facts support.
Add one line per tick: the trigger and the authority.
End with one line that sums up the answer.

Common mistakes in Business Registrations and Licences

Treating PAN and TAN as the same.
Both look alike and both relate to income tax.
Fix: PAN identifies a taxpayer. TAN is for those who deduct or collect tax at source. A business may need both.
Saying Udyam registration is compulsory.
Students link it to all small businesses.
Fix: Say it is voluntary but gives benefits such as access to MSME schemes and priority treatment.
Quoting a single GST threshold for every business.
Students memorise one figure.
Fix: Say that the limit depends on the type of supply and the State, and that some cases need registration irrespective of turnover.
Forgetting that Shops and Establishment and professional tax are State matters.
Students think all registrations are central.
Fix: Always say that the State law and State authority govern them and that details vary.
Assuming a food business needs only GST.
GST is the registration students know best.
Fix: For any food activity add FSSAI registration or licence as a separate requirement.
Ignoring IEC for a business that imports or exports goods.
Students think IEC is only for manufacturers.
Fix: Check whether the business imports or exports goods. If it does, state that an IEC from DGFT is generally needed. For services, say that IEC is generally not required unless the exporter claims benefits under the Foreign Trade Policy.

Worked examples

Example 1

Aarav Foods Private Limited, Pune, plans to make packaged snacks, sell them across several States and export part of the output to Dubai. It will employ 40 staff. List the registrations and licences it needs and name the authorities.

Show the solution

Entity: a private company, so it needs a PAN as a taxpayer.
Staff and salaries: if it deducts tax at source, it needs a TAN.
Sale of goods across States and export: Section 24 of the CGST Act requires a person making inter-State taxable supply to register for GST, irrespective of turnover. A Government notification exempts only small suppliers of goods (not in the excluded categories) from this rule, and only while their aggregate turnover stays below the notified limit. Export of goods is a zero-rated supply, which is treated as an inter-State supply, so Aarav Foods should not rely on the exemption. The question gives no turnover figure, so it should plan to register for GST and check its eligibility under the notification before assuming any exemption.
Food activity: FSSAI registration or licence under the Food Safety and Standards Act, 2006, depending on the scale.
Export of goods: an IEC from DGFT is generally needed.
Staff and premises: Maharashtra's Shops and Establishment law applies to offices and commercial parts, and professional tax applies as per State law.
Employee strength of 40: EPF and ESI may apply if the conditions of coverage are met.
Udyam: voluntary, and useful if it qualifies as an MSME.

Answer: Aarav Foods needs PAN, TAN, GST (registration is required for inter-State supply irrespective of turnover; the small-supplier exemption for goods should not be relied on because it also exports), FSSAI, IEC, State registrations such as professional tax and Shops and Establishment where applicable, and EPF and ESI if covered. Udyam is optional.

Example 2

Meera starts an online consultancy as a sole proprietor in Chennai, with no employees and no imports or exports. State which registrations she should consider and which she may skip.

Show the solution

Entity: a sole proprietor uses her individual PAN, so no new PAN is needed.
TAN: needed only if she deducts tax at source. With no employees or payments that attract TDS, she may skip it for now.
GST: she must register if her turnover crosses the threshold for services or if another rule requires it. Below that, registration is not mandatory.
Udyam: voluntary. She may register to access MSME benefits.
Shops and Establishment: she should check whether Tamil Nadu law applies to her office or home-based work.
FSSAI and IEC: not needed, as no food or import and export is involved.
Professional tax and EPF or ESI: not needed without employees, though she may check State rules on self-enrolment.

Answer: Meera needs her existing PAN, GST only once the threshold or a rule applies, and may opt for Udyam. She can skip TAN, FSSAI, IEC, EPF and ESI for now, and should check the State law on Shops and Establishment.

Exam tips

Write the registration, authority and trigger for each item. A bare list loses marks.
Use the facts in the question. Mention employees, turnover and activity by name.
Never give a threshold you are unsure of. State the principle instead.
Say clearly that Shops and Establishment and professional tax depend on the State.
Finish with a conclusion that lists the registrations, since ICSI answers expect one.

Practice questions from Identifying Laws applicable to various Industries and their Initial Compliances

Business Registrations and Licences: frequently asked questions

Which registrations are needed to start a business in India?

It depends on the entity and the activity. Most businesses need PAN. Others may need TAN, GST, Udyam, Shops and Establishment, FSSAI, IEC, professional tax, EPF and ESI when the triggers apply.

Is Udyam registration mandatory?

No. It is a voluntary online registration for micro, small and medium enterprises. It gives a certificate and helps you access MSME schemes and benefits.

Do I need both FSSAI and GST for a food business?

They are separate laws. GST is a tax registration and FSSAI is a food safety registration or licence. A food business may need both, depending on turnover and scale.

Who needs an IEC?

A business that imports or exports goods generally needs an Import Export Code from DGFT. For export of services it is generally not required, unless the exporter wants to claim benefits under the Foreign Trade Policy. There are some exceptions, so state the general rule in your answer.

How do I get Shops and Establishment registration?

You apply to the State labour department or the local authority under that State's law, usually online, within the time the State sets. The documents and fees vary by State.