Licences and rules
Panchayat licence for a homestay: the 2025 rules and K-SMART
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
- Panchayat: from the day it is issued, for up to five years. If you ask for more than one year, you pay the one-year fee for each year.
- Municipality or corporation: the Local Self Government Department says a licence is valid for five years in urban local bodies.
Renewal and late fees (panchayat)
| When you renew | What you pay |
|---|---|
| 30 days or more before it ends | The normal fee |
| In the last 30 days | The fee plus 10% of one year's fee |
| After it has ended | The 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:
- Proof of ownership, or a rent or lease agreement, or the owner's consent
- The building tax receipt
- The owner's ID
- Pollution board consent, FSSAI registration and the fire NOC, where they apply
Official sources
This is a plain guide, not legal or tax advice. Rules change: check with the office named here before you act.