Licences and rules

Panchayat licence for a homestay: the 2025 rules and K-SMART

By Homlystay, Kollam · Checked on the official websites on 29 October 2026 · 2 min read

Quick answer

Every homestay run as a business needs a licence from its local body. Panchayats follow the Kerala Panchayat Raj (Licensing of Enterprises) Rules, 2025 (from 14 August 2025): a licence can run up to five years from the day it is issued. Apply and renew on K-SMART. Renew at least 30 days before it ends, or pay extra.

The old rules are gone

For decades panchayats used the 1996 "dangerous and offensive trades" licence rules. The 2025 rules replaced them for grama panchayats. A licence issued under the old rules stays valid until the end date printed on it. Municipalities and corporations got their own new rules in March 2026 (the Kerala Municipality (Issue of Licence to Enterprises) Rules, 2026, as reported).

How long a licence lasts

Renewal and late fees (panchayat)

When you renewWhat you pay
30 days or more before it endsThe normal fee
In the last 30 daysThe fee plus 10% of one year's fee
After it has endedThe fee plus 20% for each year, and the business counts as unlicensed for the gap

The 2025 rules are published in Malayalam, and these renewal terms are our reading of them. Confirm the fee and the dates with your panchayat before you rely on them.

Fees

The fee depends on the money invested, not counting the land and the building. Under the older rules (2024), the yearly maximum for a service business was ₹500 up to ₹10 lakh invested, ₹1,000 up to ₹25 lakh, and ₹5,000 up to ₹2 crore. The new schedules may differ: ask your local body.

Applying on K-SMART

Municipalities and corporations moved to K-SMART on 1 January 2024, and all grama panchayats on 10 April 2025. Applications now go through K-SMART only. Keep these ready:

Official sources

  1. Kerala Panchayat Raj (Licensing of Enterprises) Rules, 2025 (Malayalam, official copy)
  2. Local Self Government Department: trade licence
  3. K-SMART: Know Your Approval (urban)
  4. Know Your Approval for panchayats (August 2024)
  5. The Week (PTI), 10 April 2025: K-SMART in all panchayats

This is a plain guide, not legal or tax advice. Rules change: check with the office named here before you act.