The short answer
A shop earns from the people who walk past and come in, and it is only usable if the law lets you trade there. Check the street first, the papers second and the lease third.
Nothing here replaces your own count of the people passing the door. We give no footfall or rent benchmarks, because they vary from one side of a road to the other.
Step 1: frontage and visibility
1. Measure the frontage (width on the street) as well as the floor area. Two shops of the same area can have very different shopfronts.
2. Stand across the road and walk towards the shop from both directions. Can you see it before you reach it? Do trees, hoardings, a flyover pillar or parked vehicles hide it?
3. Check the floor: ground-floor units with direct street access usually trade differently from units on upper floors or inside a building.
4. Check the step or ramp from the pavement and whether delivery vehicles can stop nearby.
Step 2: footfall, observed yourself
Visit on a weekday morning, a weekday evening and a weekend, and count the people passing in fifteen minutes each time. Note who they are: office workers, shoppers, students, families.
Look at the neighbouring shops: what they sell, whether they look busy, and how many units on the street are empty or changing hands.
Ask the shopkeepers around you how long they have traded there. Do not rely on footfall figures supplied by the landlord or the broker.
Step 3: permitted use and signage
The unit must be approved for commercial use in the building plan, and for some trades (food, medical, anything with fire risk) there are extra approvals. A shop in a residential zone or a converted residence can be sealed whatever the lease says.
Ask whether the building's occupancy certificate and, where needed, fire approval cover the use you intend.
Signage: the lease should say where you may place signs and how large; the municipality may need a permission or charge an advertisement fee. Ask the landlord whether neighbours or the association restrict signs.
Step 4: licences you will need
Shop and establishment registration: most states require shops and commercial establishments to register under the state's Shops and Establishments Act (each state has its own Act and rules, and the threshold and process differ). Register within the time the state's Act allows after you open.
Trade licence: most municipalities require a trade licence (sometimes called a health or trade licence) for the business carried on at the premises. The municipality will usually ask for the lease or the owner's consent.
Other registrations depend on the business: GST registration if your turnover crosses the threshold, food safety registration or licence for food businesses, and others for specific trades. Ask your chartered accountant which apply.
Ask the landlord for the documents these applications need — ownership proof, the occupancy certificate and a no-objection letter — before you sign.
Step 5: power, water, parking and CAM
Power: check the sanctioned load on the electricity bill and whether it is on a commercial tariff. A bakery, a salon or a cold store needs far more load than a clothes shop. Find out who pays to raise the load if needed.
Water and drainage: important for food businesses, salons and clinics.
Parking: customer parking nearby and space for your own deliveries.
CAM: in a mall or a managed complex, CAM per square foot can be a large share of the monthly cost. Ask for the current rate, what it covers and how it is revised.
Illustrative example (not market data): a 400 sq ft shop at ₹150 per sq ft a month rent and ₹25 per sq ft CAM costs ₹60,000 + ₹10,000 = ₹70,000 a month before GST, electricity and your staff.
High street, market or mall: what changes
A shop on a street or in a market is usually let by an individual owner, with few common services and little or no CAM; you deal with the owner directly on repairs, and the municipality on signs and licences.
A shop in a mall or a managed complex comes with the operator's rules: fixed trading hours, fit-out guidelines, approval of your signage and shopfront, and CAM for shared services. Some such leases charge rent as a share of your sales, or as the higher of a fixed rent and a share of sales; if yours does, define sales, the reporting you must give and the landlord's audit rights.
Neither is better in general. Compare the total monthly cost and the restrictions against how your business actually trades.
Fit-out and handover
1. List the condition of the shop at handover with photographs: shutter, flooring, ceiling, toilets, wiring, meters and any fixtures the landlord is leaving.
2. Agree what the landlord will finish before handover and by when, and how long a rent-free period you have to fit out.
3. Find out whether the building or market association has rules on working hours for fit-out, shutters, signage or exhaust ducts (essential for any food business).
4. Budget for the fit-out separately from rent: interiors, lighting, display, air-conditioning, security and any upgrade to the power connection.
Worked example: the first year's cash
Illustrative numbers only, not market data. A 400 sq ft shop at ₹70,000 a month including CAM, with a deposit of six months' rent on ₹60,000 (₹3,60,000), two months rent-free and a fit-out costing ₹6,00,000.
First-year outgo before GST, electricity and staff: deposit ₹3,60,000, fit-out ₹6,00,000, rent for ten months ₹6,00,000, and CAM for twelve months ₹1,20,000 (if CAM is payable during the rent-free period), a total of ₹16,80,000. Of that, the deposit should come back at the end, but it is cash you need now.
Run your own figures before you sign. A shop that only works if sales start in the first month leaves no room for a slow opening.
Step 6: the lease
Agree the lock-in, escalation, deposit, rent-free fit-out period, repairs, signage, subletting and exit terms in writing; our lease clauses guide walks through each.
Make the lease name your trade as the permitted use, so the landlord cannot later object to it.
Register the lease if its term needs registration, and check the state's stamp duty on it. GST may apply to the rent (at 18%, paid by the landlord or by you under reverse charge depending on registrations), and TDS on rent may apply if you are required to deduct it; see the GST and TDS guide.
Documents, questions and common mistakes
Documents to collect: the landlord's ownership proof; approved plan and occupancy certificate; fire NOC where required; latest property tax receipt; electricity bill showing load and tariff; CAM statement; the signed lease; a no-objection letter for licences.
Questions to ask the landlord: Is the unit approved for my trade? Who were the last tenants and why did they leave? What is the sanctioned power load? What does CAM cover and when was it last revised? Can I put a sign on the façade? Will you give a no-objection letter for my licences?
Mistakes: judging footfall on one visit; signing before checking that your trade licence can be issued for the address; underestimating power needs; ignoring CAM; starting fit-out before the lease is signed.
This is general information, not tax or legal advice; confirm how it applies to you with a chartered accountant (and a lawyer for the documents) before you sign or pay.
Common questions
Do I need a shop and establishment registration?
Most states require shops and commercial establishments to register under the state's Shops and Establishments Act. Each state has its own Act and rules, so check the state labour department's process.
Who issues a trade licence?
The municipality or local body for the area. It usually needs proof that you may occupy the premises, such as the lease or the owner's consent.
How do I judge footfall before renting a shop?
Count it yourself: visit on a weekday morning, a weekday evening and a weekend, count people passing in fifteen minutes, and look at how neighbouring shops trade.
Is GST payable on shop rent?
Renting commercial property attracts GST at 18%. A registered landlord charges it; if the landlord is unregistered and you are GST-registered (and not under composition), you pay it under reverse charge.
What should the lease say about my business?
Name your trade as the permitted use, and set out signage rights, repairs, lock-in, escalation, deposit and exit terms.
Is TDS deducted on shop rent?
A tenant required to deduct TDS deducts 10% where the rent for land or buildings exceeds ₹50,000 for a month or part of a month (section 393(1) of the Income-tax Act, 2025; earlier section 194-I). Whether you must deduct depends on who you are; check with a chartered accountant.
Sources
- Shops and establishments: each state's Shops and Establishments Act and rules
- Trade licence: the municipal corporation or local body for the area
- GST on commercial rent: 18%; reverse charge under Notification 09/2024-Central Tax (Rate), composition tenants excluded under Notification 07/2025-Central Tax (Rate); checked 2 October 2026
- Worked cost example uses illustrative round numbers, not market rents
Last checked 2026-10-02.