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FININ2MIN · BUSINESS PLAYBOOKS · PCJ-11

Preschool, Daycare & Crèche

Practical India guide to Preschool, Daycare & Crèche: approvals, setup, operating controls, taxes, cash flow, risks, closure, 28 FAQs and editable tools.

Finin2min Editorial Desk ·

General business education. Use the activity, location and transaction facts for legal and tax decisions; illustrative figures are not promised returns.

The two-minute answer

First decision — Play school plus after-school daycare. Two business activities may have different licensing, safety, GST and staff requirements; document both separately. Second decision — Crèche run by employer. Employer workplace obligations and Code on Social Security/State rules can differ from a standalone commercial crèche. Then execute — Clarify preschool versus daycare and age groups. Record whether children are infants, toddlers or school-ready pupils; determine working hours, meals, sleeping care, transport and educational claims. The rules for early education and workplace crèche can differ by State and governing establishment. Know the first escalation — Child missing from class or pickup. Activate immediate search/emergency protocol, notify police/parents as appropriate, preserve CCTV and sign-in logs and investigate handover failure. Save a dated licence/authority determination, responsible owner, signed contract, evidence reference and next review date at every material step. This is the minimum practical answer before committing capital or promising a customer outcome.

Apply this in order: classify your operating model; check land and licensing; build sector-specific controls; confirm tax treatment; maintain evidence; then test cash economics. A licence is not a substitute for ongoing safe operation.

Choose your exact model before applying

Operating modelHow it changes complianceMinimum evidence
Preschool/play schoolCurricular, registration and safety expectations depend on State education or women/child welfare rules.State permission, age policy, child-safe layout
Standalone daycareChild supervision, pickup controls, food, rest and staffing dominate.Guardian authorisation, shift/risk register
Employer crèche serviceClient-employer obligations, working premises and welfare rules require contract allocation.Service agreement, staffing and incident SOP

Six practical steps — registration to operation

STEP 01

Classify the service and child age groups

Distinguish daycare, play learning, formal school admissions and employer crèche. Record the age bands, hours, transport, meals, clinical support and whether the centre advertises board affiliation or recognised classes. Confirm State-specific permission category with the competent education or welfare authority.

STEP 02

Select a child-safe approved facility

Review lawful premises use, safe entry/exit, stairs and balcony guards, toilets, ventilation, fire detection, evacuation for toddlers, play equipment, CCTV/privacy policy and pickup/drop-off flows. Run a realistic emergency drill and maintain incident numbers and local hospital contact.

STEP 03

Screen staff and child protection processes

Verify identity and references, background-check requirements under relevant local rules, staff training and safe adult/child ratios prescribed by the jurisdiction. Define abuse reporting, mandatory escalation, medical emergency, suspected allergies and medication authorisation.

STEP 04

Map food and transport add-ons

If preparing/serving food as an FBO, review FoSCoS category, kitchen hygiene and allergies. If providing vehicles, verify transport permits, escorts and child restraint/safety rules. Do not assume tuition registration authorises separate transport or food services.

STEP 05

Write enforceable parent and data terms

Clearly disclose hours, emergency medical authorisation, fees, refunds, closures, illness exclusion, authorised guardians and photo-sharing. Personal data on children has special legal sensitivity; apply present child-protection duties and prepare for DPDP phased requirements without implying all future duties are effective today.

STEP 06

Financially plan staffing and capacity

Model maximum safe enrolment, actual attendance, monthly staffing, rent, supervised hours, insurance, toys and cleaning. A high nominal seat count is not available capacity unless safe staffing, space and emergency provision support it.

Regulatory applicability and authority matrix

Statute / regulatorWhat triggers itWhat to verifyKeep on file
State preschool/daycare rulesState licensing/recognition depends on age and activity.Obtain applicable status; verify education and child-welfare rules.Registration, fire/site record
Child protection laws and safetyAll centres interacting with minors.Train staff and document escalation and parent consent.Screening, incident register and authorisations
FSSAI and motor vehicle regulation if usedMeals/food and transport add-on operations.Assess separate food/transport compliance.Food logs, permits, vehicle records
Labour Codes and DPDP phased rulesStaff rights and processing children’s personal data.Apply State labour rules and phased privacy deadlines.Personnel contracts, data policy

GST, income tax and cash-recognition decisions

Transaction / obligationAssessment and treatment
Preschool and daycare feesGST exemption depends on the legal character of educational institution/service; do not assume every coaching/daycare is exempt.
Meals and transportAnalyse bundled and separate supplies on their facts.
Parent deposits and refundsTrack refundable security and unearned prepaid fees separately.
Income taxKeep accounting books and prescribed withholding/payroll records under operative provisions.

Forms, registers and evidence checklist

Document / recordWhat to includeOwner / authority
PermissionsState/municipal preschool or daycare status and premisesCompetent authority
Child safetyScreening, incident/abuse escalation, fire drillSafeguarding file
ParentsContact, pickup permissions, consent, fee/refund agreementChild records
AncillaryFood hygiene and vehicle/escort controls as applicableSite / transport
CapacityChild-to-staff capacity, attendance and monthly budgetOperations dashboard

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Financial model: revenue, profit and cash are different

Net revenue₹672,000
Contribution₹528,000
Operating cash profit₹158,000
Input or resultValueMeaning
Monthly volume64 occupied child-monthsRetained, accepted or billable output—not merely enquiries/dispatches
Realised price₹10,500Net of refunds and indirect tax
Variable cost per unit₹2,250Direct cash costs allocated to the same billable unit
Fixed operating cash cost₹370,000Excludes depreciation, finance charges and income tax
Contribution per unit₹8,250Price minus variable unit cost
Break-even volume45 occupied child-monthsFixed cost ÷ contribution, rounded up
Capacity utilisation80.0%Volume ÷ illustrative safe/saleable capacity

Worked calculation: 64 × (₹10,500 − ₹2,250) = ₹528,000 contribution; less ₹370,000 fixed cash costs leaves ₹158,000 before financing, depreciation, tax and capital expenditure. A 10% fall in volume alone reduces contribution by ₹52,800. A 10% rise in unit variable cost alone reduces it by ₹14,400.

Open the editable finance workbook

A full enrolment book is not proof of safe childcare capacity

A daycare receives requests for longer hours and additional children. Revenue rises on paper, but handover congestion, staff absence and the mix of children’s ages make the actual supervision requirement different from a simple seat count.

Work through the decision

Assess the operating model, local recognition route and premises requirements for the actual age groups and services. Document authorised pickup, medical information, allergy handling, attendance, incident escalation and staff screening. Stress-test arrival, meals, rest and departure with the intended staffing and backup arrangements.

What to establish before proceeding

Accept enrolment against demonstrable supervision and approved premises conditions, not floor-area arithmetic alone. Make fees, holiday arrangements, late pickup and refund terms clear. Keep children’s records restricted to authorised staff and the specific care purpose.

Operating measureDefinition and use
Attended child-hoursActual attendance by age group and time window, compared with the supervision plan.
Authorised handover exceptionsPickup identity or authority mismatches documented and resolved before a child leaves.
Staff-cover reliabilityPlanned supervision slots actually filled by screened and competent staff, including absence cover.

This example is Finin2min’s operating analysis. Its commercial assumptions are not quoted market terms or a permit determination.

Common mistakes and how to avoid them

  • Unregistered school claims. Do not describe a daycare as a recognised school without documentary proof.
  • Uncontrolled pickup. Named guardian identification and handover logs are essential.
  • Unvetted staff and no incident protocol. Create training and reporting routes before launch.
  • Assumed GST exemption. Education exemptions are definition-dependent and fact-specific.

Practical 30/60/90-day implementation plan

PeriodSpecific milestone
Days 1–30Map ages, hours, food and transport offerings to local requirements and the supervision plan.
Days 31–60Run guardian verification, staff-absence cover, evacuation and incident communication simulations.
Days 61–90Review attendance patterns, staffing adequacy and parent complaints before extending hours or enrolment.

Your launch readiness checklist

0 of 10 launch tasks marked done (this page only)

Which business model changes the legal answer?

SituationExact action and proof of decision
Play school plus after-school daycareTwo business activities may have different licensing, safety, GST and staff requirements; document both separately.
Crèche run by employerEmployer workplace obligations and Code on Social Security/State rules can differ from a standalone commercial crèche.
School transport vanVerify commercial passenger permits, vehicle safety, route, authorised pickup and child supervision; regular school-use assumptions do not automatically apply.
Meals cooked onsiteFSSAI Kind-of-Business and food safety duties depend on activity and operator; do not treat children’s age as a blanket waiver.
Special-needs supportCheck trained staff, accessibility, lawful professional scope and documented parent care plan without unsupported therapeutic claims.
CCTV of childrenRestrict live/recorded access and retention, explain lawful purpose and consent choices under applicable privacy and safeguarding requirements.

Complete execution SOP: what to do, in order

  1. Clarify preschool versus daycare and age groups

    Record whether children are infants, toddlers or school-ready pupils; determine working hours, meals, sleeping care, transport and educational claims. The rules for early education and workplace crèche can differ by State and governing establishment.

  2. Verify local registration and location suitability

    Check State preschool/childcare regulations, local government permissions, fire/building occupancy, sanitation, minimum space, toilet and safe pickup infrastructure before final lease.

  3. Implement safeguarding and staff checks

    Obtain identity/background checks permitted by law, child protection policy, staff-to-child supervision plans, incident escalation, no corporal punishment and handover authorisations. POCSO/child-protection duties must be integrated into SOPs.

  4. Design health, meals and emergency handling

    Collect parent emergency contact and medication/allergy instructions, establish food vendor/FSSAI applicability, first aid, infection control, lost-child drill and reporting obligations.

  5. Create a legally clear parent agreement

    Spell out admission, fees, refund, holidays, additional charges, illness exclusions, transport responsibility, authorised pickup, photo/data consents and grievance mechanism.

  6. Separate childcare tax and workforce treatment

    Assess whether service qualifies as a notified pre-school education exemption and which services may fall outside it; check establishment, wages, working hours and labour rules.

  7. Audit ratios, records and child incidents

    Daily reconcile attendance with physical head count at opening, class transition, bus and pickup; review anonymous incident patterns and remedial action.

What to do when something goes wrong

Real-world problemAction, evidence and remedy
Child missing from class or pickupActivate immediate search/emergency protocol, notify police/parents as appropriate, preserve CCTV and sign-in logs and investigate handover failure.
Injury or allergic reactionPrioritise medical care, follow parent authorisation/emergency plan and keep accurate incident reporting; prevent recurrence through supervision/product controls.
Staff safeguarding complaintUse protected reporting and mandatory child-protection pathways where applicable, restrict accused person’s access pending lawful process and protect confidentiality.
Food-borne illness clusterQuarantine meals, record supplier/batch and temperature, contact medical/public health authority when required and preserve evidence.
Parent requests all child dataUse secure identity verification, privacy and retention rules for sensitive child information; provide lawful access without exposing other children.

Contract clauses and counterparty safeguards

  1. Define preschool/daycare services, hours, illness and authorised pickup clearly
  2. State fees, deposits, holiday policy, withdrawal/refund and child safeguarding commitments
  3. Include emergency medical authorisation and documented allergy protocol
  4. Restrict use of minor photographs, attendance and health data
  5. Allocate transport and third-party food/cleaning provider responsibilities

Operational templates, registers and checklists

Stress tests, funding and month-end finance

Stress / funding itemIllustrative resultDecision
Volume −20% and unit cost +10%₹40,880 monthly operating resultReduce avoidable fixed costs, reprice or improve retained volume before adding debt
An extra 30 days of collection delay₹672,000 additional receivablesProfit is unchanged initially, but cash is locked up
Startup equipment cash₹1,800,000Separate capital expenditure from operating cost
Refundable lease deposit₹450,000Not an ordinary monthly expense
Opening liquidity buffer₹1,200,000A planning assumption—not proof the business is adequately funded

Financing decision

Law, effective date and applicable authority

Direct tax: use the correct year and law

Official reading: CBDT — Income-tax Act, 2025 commencement

Labour: commencement and operating rules are separate checks

Official reading: Ministry of Labour — four Labour Codes commencement

GST: classification, notification and date

Official reading: CBIC tax-information repository · Ministry of Finance — 56th GST Council FAQ

Personal data: staged commencement

Official reading: Gazette — DPDP Act phased commencement, G.S.R. 843(E)

Commercial and legal decisions before spending

Distinguish education from custodial care

Preschool education, full-day daycare, after-school care and an employer-linked crèche may have different recognition, staffing and premises conditions. Record age groups, hours, maximum children, meals, transport and activities. Do not presume that a franchise agreement or an education-related name grants recognition or makes every receipt tax-exempt.

Make safeguarding a launch gate

Design authorised pickup, visitor control, staff background verification, child-to-staff coverage under applicable standards, first aid, evacuation and missing-child procedures. Define who may administer medication, how allergies are communicated and how incidents reach parents. Staff should know the escalation route under applicable child-protection law; confidentiality must not be used to suppress a report that must be made.

Plan fees and capacity around real attendance

Monthly fees should cover staffing required for safe approved capacity, not only average daily attendance. Model meals, learning materials, cleaning, replacement staff and holiday periods. Admissions deposits, annual activity fees and monthly tuition/daycare charges have different service periods and refund terms. Track unserved fees and refundable deposits so the next intake is not needed to fund existing commitments.

Keep the parent agreement practical

Set pickup authorisation, late pickup, illness/exclusion, emergency consent, meals, allergies, fee changes, holidays, refunds, photos and grievance handling. Explain what the centre provides and what it does not. A general waiver is not a substitute for safeguarding; a transport vendor should have a separate verified safety and handover process.

Official reading: National Commission for Protection of Child Rights · National Single Window System — Know Your Approvals and State portals · Department of Consumer Affairs · Ministry of Labour — four Labour Codes commencement · FoSCoS eligibility schedule — effective 1 April 2026 · Gazette — DPDP Act phased commencement, G.S.R. 843(E)

Approvals: authority, process and completion evidence

Preschool/daycare recognition and location

Authority: State education / women-and-child-development / local authority

Process: Identify which framework governs the actual service and age group; submit required premises, capacity, staffing and safety documents before enrolment.

Completion evidence: Applicable recognition/registration or documented authority determination, with permitted capacity.

Building, fire and child safety

Authority: Local body / fire authority

Process: Confirm permitted use, safe entry/exit, toilets, play areas, electrical and fire safety and accessibility for the intended children.

Completion evidence: Applicable approvals, evacuation drill and hazard-control record.

Food and transport add-ons

Authority: FoSCoS / transport authorities

Process: Classify meals prepared/supplied and any owned/contracted transport separately. Verify relevant supplier/vehicle/driver and food requirements.

Completion evidence: Food-supplier records, transport documents and child-handover protocol.

Employees and parent information

Authority: Applicable labour / child-protection / privacy framework

Process: Verify staff, training, duty cover, complaint escalation and controlled access to child information/photos. Map privacy duties to current commencement.

Completion evidence: Personnel verification, parent consents, access log and safeguarding incident procedure.

Application passport: from eligibility to approval

Permissions, prescribed forms, fees and professional review

Recognition and child-age model

Facts that determine applicability: Specify State/city, age groups, childcare hours, preschool instruction and whether school affiliation is claimed.

Competent authority: Competent State education/WCD/local authority

Application and prescribed form: Identify the State recognition route. Haryana WCD expressly links private-play-school recognition to SARAL; that is a Haryana example only.

Fees and funding: Use the chosen State’s application/inspection/renewal schedule; do not infer a national NCPCR registration fee.

Completion evidence: Recognition applicability, submitted form, fee demand if applicable, premises and approval conditions.

Question for the relevant professional: Which statutory/recognition regime applies to this exact age group and service model?

Official authority or instrument

Child-safety standards

Facts that determine applicability: Map supervision, staff screening, pickup authorisation, hygiene, emergencies and safeguarding.

Competent authority: Relevant State child-protection/education authority; NCPCR guidance

Application and prescribed form: Read the applicable full guideline and State adoption; maintain child-safety policies and incident escalation evidence.

Fees and funding: Budget safety facilities and staff separately from licence fees; these costs are not an approval receipt.

Completion evidence: Attendance and release controls, staff checks, emergency drills, safeguarding and complaint records.

Question for the relevant professional: Are recognition conditions and safeguarding practices met for this site and child capacity?

Official authority or instrument

Food, premises and transport branches

Facts that determine applicability: Identify meals, kitchen, outsourced catering and child transport actually offered.

Competent authority: FSSAI and competent local/transport authorities where triggered

Application and prescribed form: Assess each branch separately rather than treating recognition as permission for every ancillary service.

Fees and funding: Record each relevant approval and fee separately with actual provider/vehicle/site identifiers.

Completion evidence: Meal-provider credentials, premises safety, transport arrangements and parental communications.

Question for the relevant professional: Does the chosen ancillary activity require a separate approval or contract control?

Official authority or instrument

Prepare the decision file

Daily controls, review rhythm and escalation

Daily: attendance and headcount at transitions, authorised pickup, allergy/medication checks and staffing cover.

Weekly: safeguarding concerns, parent grievances, supplies, cleaning and emergency-readiness checks.

Monthly: fee/deposit reconciliation, capacity and staffing compliance, incident review and renewal/change obligations.

Respond to an incident without destroying evidence

Exit, sale, closure and continuing liabilities

Give parents a workable transition plan and settle unserved fees/deposits before closure. Safeguard child records, determine lawful transfer/access arrangements and complete employee and premises obligations. A move to another building requires a fresh location/permission assessment, not just a parent circular.

Closing evidence and liabilities

Business-specific questions answered

Is a crèche a school?

Not necessarily; State approvals and the service offered are different.

Can a daycare take infants in any rented flat?

Local land-use, space, safety and relevant childcare rules must be checked.

Does selling meals change compliance?

It may; check food business scope, hygiene and GST treatment.

When do DPDP children’s consent rules apply?

Consult the gazetted phased commencement; avoid treating future provisions as already commenced.

The answers below address common real-world situations. Each must still be matched to the operator’s actual facts, current tax notification and State/local rules.

Is play school registration identical across States?

No. Confirm whether the State has adopted specific preschool/early childhood regulations, recognition or registration and separately verify municipal and building conditions.

Does daycare count as exempt education for GST?

Not automatically. Analyse notified educational-institution exemption against actual age, curriculum, institution and bundled services.

What should parents sign before admission?

Detailed admission agreement, emergency contacts, allergies/medical care authority, pickup list, attendance/transport terms, fees/refund and privacy/photography consents.

Is CCTV mandatory everywhere?

No universal conclusion. Requirements can be jurisdictional or safeguarding-policy specific; where installed, use child privacy, access control and retention governance.

Can parents authorise any neighbour to collect a child?

Use a documented authorised pickup list with verification and exceptional release protocol; never rely only on a last-minute unverified phone call.

What about teacher-to-child ratios?

Follow governing State regulations, activity risk and age-specific safety guidance; publish ratio targets and retain actual attendance/roster proof.

Can a daycare give medicine to a child?

Use policy requiring parent instructions, qualified advice when necessary, dose record, safe storage and emergency escalation; staff must not make independent medical prescriptions.

Can photographs be published on social media?

Obtain specific parent/guardian permission, protect children’s identity/location and support withdrawal; data law has phased provisions requiring ongoing review.

Is a fire drill enough to prove safety?

No. Test evacuation, head count, accessible exits, trained employees, equipment maintenance and child pickup reconciliation and local fire requirements.

Do I need an FSSAI registration for a child lunch programme?

Check whether preparing, storing or selling food makes the operator an FBO and the exact Kind-of-Business and any exception under 2026 rules.

How should prepaid term fees be accounted?

Recognise service revenue by relevant accounting policy and obligation; keep refundable/unearned fee liability distinct from cash received.

What incident register do inspectors and parents need?

Record date/time, child ID, witness, facts, response, parent notification, care/referral, corrective action and authorised access to the confidential file.

Can a franchise certificate replace preschool recognition?

No. It is a commercial relationship. Determine the State/local framework for the actual preschool/daycare service, premises and age groups and obtain the required approval independently of the brand agreement.

Are daycare and preschool fees always treated the same for GST?

Do not assume this. Education exemptions depend on the defined institution and supply; custodial daycare, transport, meals and other services require their own analysis. Record the contractual service and relevant exemption conditions.

How many children can I enrol?

Use the capacity permitted by the applicable premises and sector standards, with required staff coverage, not the number that fits into a marketing plan. Check age groups, room layout, evacuation and local conditions before accepting fees.

Can grandparents or a driver collect a child without prior authorisation?

Use the parent-approved pickup process and verify identity/changes through a trusted channel. Escalate conflicting instructions safely. A familiar face or verbal claim is not sufficient evidence of authorised custody handover.

How should annual fees be recognised?

Match the fee to the services and period it pays for under the accounting policy; maintain unearned fees and refundable balances. Do not spend the entire annual receipt as profit while future childcare obligations remain.

What happens when the main caregiver is absent?

Maintain trained, verified backup coverage so required supervision is not broken. Reduce or suspend the affected capacity where safe coverage cannot be maintained and communicate with parents rather than improvising with unverified staff.

Can children’s photos be used in admission advertisements?

Obtain appropriate specific permission from the authorised parent/guardian and apply privacy and safeguarding controls. Avoid unnecessary identifiers and location information; enrolment consent is not blanket permission for public marketing.

What should an injury or safeguarding concern trigger?

Attend to immediate safety, obtain appropriate help, preserve factual records and follow the applicable reporting/escalation framework. Inform parents appropriately without compromising mandatory reporting or an investigation; do not conceal an incident to protect the centre’s reputation.

How do I budget staffing at low occupancy?

Some minimum safe staffing does not fall proportionately with enrolment. Model fixed coverage and variable child costs separately, with an occupancy ramp and emergency replacement expense. The sample break-even is a financial calculation, not permission to exceed safe capacity.

Should meals be outsourced to avoid all food obligations?

Outsourcing does not remove the need to select a compliant supplier and manage safe receipt, storage, allergies and serving. Check the actual food-business requirements for the centre and vendor and retain their records.

What should a parent refund policy cover?

Admission cancellation, withdrawal notice, illness/closure, unserved periods, deposits and genuine third-party charges. Explain amounts and processing steps before payment and respect applicable consumer/education requirements instead of using an absolute no-refund clause.

What evidence is needed for an employer crèche arrangement?

Specify capacity, eligibility, staff, hours, transport, safeguarding, incident notification, payment and audit rights. Determine how the employer’s legal obligation and the centre’s operating permissions interact; a service contract alone does not prove both are fulfilled.

State/UT and city-level applicability test

  1. Is the chosen premises permitted for this exact business and capacity?
  2. Which State, city and sector permit applies to each activity and each operating location?
  3. Are there fire, building, waste, signage, labour or medical safety conditions for this site?
  4. Do thresholds, professional qualifications, inspection dates or renewals differ here?
  5. Has any 2026 amendment commenced, been notified or changed the relevant form/fee?
  6. Who is legally responsible for each filing, complaint, accident and customer refund?
Apply the law in force rather than an unnotified proposal. A general threshold is never proof that a sectoral exemption or local registration applies.

What to check when a law or business model changes

Official sources and prescribed-form routes

Use the instrument applicable to the actual activity, jurisdiction and date. A directory is a route to the competent authority, not an individual licence determination.

NCPCR — official guidelines catalogue
Catalogue route to child-safety resources. Obtain the actual guideline and applicable State recognition requirements.

National Single Window System — Know Your Approvals and State portals
Navigation framework; not a substitute for municipal or sector permissions.

India Code — Consumer Protection Act, 2019
Primary Act; read the separately applicable e-commerce, advertising and other subordinate instruments for the activity and date.

Ministry of Labour — four Labour Codes commencement
21 November 2025 commencement; applicable Central/State rules and transition must be considered.

FoSCoS Kind of Business eligibility and annual fee schedule
Schedule updated 1 April 2026; use the exact activity row, premises and annual fee. Category-specific conditions override generic turnover assumptions.

Gazette — DPDP Act phased commencement, G.S.R. 843(E)
13 November 2025; immediate, one-year and eighteen-month provision groups. Do not treat every substantive duty as already commenced.

CBDT — Income-tax Act, 2025 commencement
Act effective 1 April 2026; Rules notified 20 March 2026. Match the tax year before using earlier section/form numbers.

Continue your business planning

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Separate preschool recognition from infant daycare

NCPCR’s private-play-school guidelines concern children aged three to six. Their scope excludes early-childhood services for children aged zero to three and distinguishes schools covered by the RTE Act. The document also provides for State notification or adoption. Do not apply its recognition pathway automatically to an infant-care operation or assume that it is a nationally issued operating licence.

For a mixed preschool and daycare centre, record the age groups, hours, premises and service model separately. Ask the competent State authority which recognition, childcare, staffing and premises requirements govern each part. Use the application, fee and inspection arrangements actually adopted there.

NCPCR private-play-school guidelines: title and scope