Homestay or Café in Dharamshala and McLeodganj (2026): MC Trade Licence, Building Limits, Form C and Kangra Offices
A homestay in Dharamshala follows the same state law as anywhere in Himachal: the HP Home Stay Rules, 2025, with registration on homestay.hp.gov.in. What is different is local. Dharamshala is a Municipal Corporation, so homestays pay the highest fee band and commercial rates for power and water, and every business needs the MC’s trade licence. Building in upper Dharamshala is limited to four storeys, construction in McLeodganj has been tightly restricted since a 2019 tribunal order, and police in McLeodganj registered cases against guest houses in September 2026 for not filing Form C for foreign guests. This guide covers the Dharamshala-specific points for homestays, guest houses and cafés in McLeodganj, Bhagsu, Dharamkot and Naddi.
What applies where
| Requirement | Who grants it | Dharamshala point |
|---|---|---|
| Homestay registration | District Tourism Development Officer, Kangra (Dharamshala) | Municipal Corporation fee band; owner-only registration |
| Hotel or guest house registration | DTDO, Kangra, under the HP Tourism Act, 2002 | Needed above six rooms or on leased premises |
| Trade licence | Municipal Corporation Dharamshala | Required since 2025 for anyone trading or providing services within MC limits |
| Building permission | MC and Town and Country Planning, Dharamshala Planning Area | Four storeys and FAR 1.75; McLeodganj core area restricted |
| Pollution consent | HP State Pollution Control Board | Fresh consents for McLeodganj hotels were frozen after the 2019 NGT order |
| Form C for foreign guests | Filed online by the accommodation provider | Police cases registered in McLeodganj in 2026 |
| GST and state tax | Deputy Commissioner, State Taxes and Excise, Kangra at Dharamshala | Covers Kangra district except Nurpur |
The MC trade licence
- Dharamshala became a Municipal Corporation in 2015, covering 17 wards including McLeodganj, Bhagsu and the merged villages.
- In 2025 the MC began requiring a trade licence under the HP Municipal Corporation Act, 1994 from everyone trading or providing services within its limits. After protests by traders, who argued they already held Shops and Establishments registration, the fee was set at ₹500 for five years.
- Homestays, guest houses, cafés, travel agents and shops all fall within it. Apply to the MC office near the fire station in Dharamshala, and keep the licence with your tourism registration.
Homestay registration in a Municipal Corporation area
- Highest fee band: the Home Stay Rules charge Municipal Corporation areas the most, rising with tariff category (Silver, Gold or Diamond). Our step-by-step homestay registration guide has the current fees.
- Commercial utilities: in MC and planning areas the homestay portion pays commercial rates for electricity, water, sewerage and garbage; fit a separate meter to keep domestic rates for your own home.
- Owner only: registration is for the owner recorded in the revenue records. A tenant or lessee who runs rooms has to register as a guest house or hotel under the Tourism Act instead. See hotel and guest house registration in Himachal.
- Unregistered units: reports in December 2024 put registered homestays in Kangra at about 450, against more than 1,000 thought to be operating around Dharamshala without registration, some listing 20 or more rooms online. Running an unregistered tourism unit attracts a ₹1 lakh fine under the Tourism Act, and on repeat the water and power can be cut.
Building and planning limits
- Four storeys: in the seismically active Dharamshala area, buildings are limited to four storeys with a floor area ratio of 1.75. Reports in 2023 estimated that about a fifth of buildings in McLeodganj, Bhagsunag and Dharamkot breach the planning law, some at seven storeys.
- McLeodganj core area: the area around the Tsuglagkhang complex has little developable land left. Construction there was once barred entirely; later amendments allowed some, with parking required for each hotel, but old illegal structures cannot be regularised.
- The NGT freeze: after the National Green Tribunal’s 2019 order on Manali and McLeodganj, the MC reported a complete ban on construction in McLeodganj and the Pollution Control Board stopped issuing fresh consents to hotels and guest houses there. We found no later order lifting it, so assume new commercial construction in McLeodganj will not get consent.
- Wider planning area: 117 more Kangra villages came under the Town and Country Planning Act in August 2024, including 22 in Dharamshala constituency; commercial construction there now needs planning permission.
- Forest land: encroachments on forest land in Dharamkot and Naddi were cleared in 2024 under High Court directions, and illegal rest houses near Triund were flagged. Check the land record before leasing any site near the forest line.
If you are not a Himachali agriculturist, buying land also needs permission under section 118. See our section 118 guide.
Foreign guests and Form C
McLeodganj draws many foreign visitors, and every accommodation provider, from a hotel to a single-room homestay, must file Form C online within 24 hours of a foreign guest’s arrival under the Immigration and Foreigners Act, 2025. In September 2026, McLeodganj police registered cases against two guest houses for not filing Form C for German and Israeli guests. Build Form C into check-in, and keep the passport and visa copies.
Tibetan-run homestays and cafés
- Cafés and shops: the 2014 Tibetan Rehabilitation Policy lets states issue trade licences to Tibetan refugees, and a café needs the MC trade licence, FSSAI registration and GST where applicable.
- Homestays: because homestay registration is for owners recorded in the revenue records, a Tibetan resident who only leases premises cannot register a homestay in their own name. Long-term leases of property by some foreign nationals also need RBI approval beyond five years. Take advice before signing a lease for a guest house.
Water, sewerage and the season
- McLeodganj and Bhagsunag sewer lines have overflowed repeatedly since they were laid around 2021, and landslides in August 2025 damaged the main supply line from the Naddi treatment plant. Plan storage tanks and a septic arrangement approved by the Jal Shakti Department.
- Kangra was declared Himachal’s tourism capital in 2025, and the Gaggal airport runway is being extended, which is expected to lift arrivals.
- Paragliding at Bir-Billing closes every year from 15 July to 15 September. See our paragliding operator guide.
Tax and books
- GST: registration once turnover crosses ₹20 lakh. Rooms up to ₹7,500 a night are at 5% without input tax credit; a café outside a hotel is at 5% without credit.
- State tax office: the Deputy Commissioner, State Taxes and Excise, Kangra at Dharamshala handles GST for the district except Nurpur; appeals go to the Joint Commissioner at Palampur.
- Income tax: homestay and café income is business income; small owners can use presumptive tax under section 58 of the Income-tax Act, 2025.
Our guides to GST for hotels and homestays in Himachal and café licences in Manali and Kasol apply equally in Kangra.
Useful local offices
- District Tourism Development Officer, Kangra: near the MC office, Dharamshala 176215; phone 01892-224430.
- Municipal Corporation Dharamshala: near the fire station, Dharamshala 176215.
- Deputy Commissioner, State Taxes and Excise, Kangra: Dharamshala; phone 01892-224886.
Frequently asked questions
Do I need a trade licence for a homestay in Dharamshala?
Yes. Since 2025 the Municipal Corporation requires a trade licence from anyone trading or providing services within its limits, in addition to homestay registration with the Tourism Department.
Can I build a new guest house in McLeodganj?
It is very difficult. Construction in McLeodganj has been tightly restricted since the 2019 NGT order, and new hotels and guest houses there have not been getting pollution consent. Elsewhere in Dharamshala the limit is four storeys.
Can a tenant register a homestay in Dharamshala?
No. Homestay registration is for the owner recorded in the revenue records. A tenant running rooms must register as a guest house or hotel.
What happens if I do not file Form C for a foreign guest?
It is an offence under the Immigration and Foreigners Act, 2025, and McLeodganj police registered cases against guest houses for it in 2026.
TAXAJ’s Himachal team handles tourism registration paperwork, GST, books and income tax for homestays, guest houses and cafés. Talk to our Himachal office.
Last updated 27 October 2026. Sources: HP Home Stay Rules, 2025; HP Tourism Development and Registration Act, 2002; HP Municipal Corporation Act, 1994; Dharamshala Planning Area development plan documents (TCP Himachal); NGT proceedings on Manali and McLeodganj (2019-2020); High Court of Himachal Pradesh order on McLeodganj and Naddi hotels (2017); Immigration and Foreigners Act, 2025; MHA Tibetan Rehabilitation Policy, 2014; RBI FAQ on property transactions; HP State Taxes and Excise list of offices; reports in The Tribune (2019 to 2025) and UNI (September 2026). General information only; check your site and premises with the MC and TCP before investing.
