Starting a business is difficult. Starting an alcohol-based business is even harder. With all the legal hoops to jump through, it can be daunting to go through the process. Everything will have to be taken care of, from licenses to taxes and insurance. This handy guide will make it easy for you.
This is the first hoop in the series of hoops you will have to go through. Since alcohol is a state subject, each state has different rules and regulations regarding starting an alcohol-based business.
Depending on the nature of your business establishment, there are several types of licenses to choose from.
- Apply for a beer and wine license when you only sell soft drinks. The sale of strong alcohol is not authorized.
- Apply for a Restaurant Liquor license when you want to sell sweet and strong spirits. This license is applicable as long as your income from alcohol does not exceed 40%.
- Apply for a Tavern license when you want to sell sweet and strong spirits. In this case, your income from alcohol does not exceed 50%.
- Apply for a Brewery license when you go to brew your own spirits yourself, such as beer and wine.
Other common licenses include –
- L1 – wholesale supply of Indian liquor to other licensees.
- L3 – It allows hotels to serve foreign alcoholic beverages to their guests in their rooms.
- L5 – Allows serving alcohol in hotel bars or restaurants.
- L6 – Granted to retail sellers of Indian beers and liquors.
- L19 – Given to a club registered to sell foreign liquor.
- L49 – To serve alcohol at a party or function at specific premises anywhere in a state.
To apply for a liquor license, you will need to submit the following documents to your state excise department –
- Identity proof.
- Proof of address.
- Proof of address of the premises/company.
- CNP of the municipal corporation and the fire department.
- Application with personal and professional details.
- MOA and AOA for companies.
- Latest ITR copy.
- A photographer.
- Affidavit attesting that the applicant has no criminal record.
- An affidavit confirming that the applicant has no pending assessments.
The documents you need to submit will differ depending on the rules of your state’s excise department.
To apply for a license, visit the official website of your state excise department.
When running a business, one must ensure that one’s taxes are paid on time. After getting your license, make sure you have all your tax documents sorted. Since alcohol is a state subject, the Goods and Services Tax does not apply to it. States levy both an excise tax and VAT on alcoholic beverages.
The interest rate varies from state to state. In order to check your state’s interest rate, go through the official website of your state department of excise.
Apart from this, you will also have to pay income tax which depends on the amount of income generated from your business.
Like any other business establishment, even a liquor store, it is wise to carry insurance to protect your business. In India, insurance companies offer “store insurance” which provides coverage for shopkeepers in the event of serial accidents. This includes natural disasters, fires, riots, terrorist attacks, etc.
Buying insurance is a good way to ensure that you are protected against any loss in the event of an unforeseen accident.
INTELLECTUAL PROPERTY RIGHTS
If you are a brewer of alcohol with a unique design or name for the product you produce, trademarking it would help ensure that your rights are not infringed. The number of IPR infringements has been increasing in recent years. Companies copied each other’s names and bottle designs, resulting in a loss of customers.
Having a registered trademark will help you fight for your rights in case something goes wrong in the future.
Like any other business establishment, a liquor store will also have a series of contracts with your vendors and employees. Such contracts shall be governed by the provisions of the Indian Contracts Act. The conditions mentioned in the contract must be respected by both parties. In the event of a problem, the solution mentioned in the contract must be respected.
It may seem daunting at first, but by following a few simple steps, one can open a successful liquor business anywhere in the country. Compliance with the rules established by the local state excise department is essential in this regard. Having expert legal help will ensure that you clear all your hurdles seamlessly and your business is up and running without any problems.