How to start a PG business in India: licences, costs & profits

Licences and registrations

• Trade licence from the municipal body (many cities have a specific PG/guest-house category).
• FSSAI registration if you serve food.
• Fire safety compliance for larger buildings.
• GST registration once turnover crosses the threshold.
• Tenant police verification for every resident (mandatory in most states).

The unit economics

Typical North India setup cost runs ₹40,000–₹80,000 per bed (furniture, appliances, deposits, interiors). With double/triple sharing at ₹7,000–₹15,000 per bed in metro pockets, healthy operations target 85–95% occupancy and 25–40% operating margin after rent, food, utilities and staff.

What separates profitable PGs

1. Location within 15 minutes of the demand source.
2. Collection efficiency above 97% — automated reminders, not phone calls.
3. Utility control via sub-meters.
4. Food quality (the #1 review driver).
5. Fast maintenance response, tracked as a KPI.

Systems from day one

Start on software, not registers: bed-level inventory, digital agreements, UPI QR collection and ticketing cost less than one month of one bed’s rent — and make the business sellable later because the books are clean.