Trade Licence

About Trade Licence

Overview

To start a company or trade-in a specific location, the business owner has to have a Trade License. Trade license is issued with respect to the particular business field, which means it is not permitted to do many companies with one trade license. Having a trade license or business license does not imply that the license holder owns any property.

Trade license was introduced 40 years ago in India, and it is regulated by the respective state governments under the Municipal Corporation Act. Municipal Corporation ensures that no business causes annoyance and health hazards because of its scope of work.

It is mandatory to receive a trade license in order to carry out any specific trade or company in a particular location/area. By doing so, the government guarantees no illegal or unethical activities are going on. Trade license puts all the businessmen under a common umbrella of laws, regulations, safety measures, and guidelines, thus bringing harmony and peace in the society. The government controls various commercial activities through trade licenses. Trade license is granted to those who are doing or have plans for setting up their business in commercial areas only. The government bans any business from residential places as it disturbs the local area or environment.

The licensing department of municipal corporations issues trades licenses for doing business in different sectors like engineering, health, food processing, etc.

The procedure to apply for trade license varies from one state to another as various Municipal Corporations have their own set of laws and regulations.

Different Types of Trade License

• Industry License: Large, medium, small scale production units
• Shop License: Risky and dangerous trades like fireworks manufacturing, sale of firewood, barbershop, candle making, laundry service, etc.
• Food Establishment License: Food stalls, Retail of meat and vegetable, restaurants, hotels, canteens, bakers, etc.

Eligibility for Trade License

• Applicant must be 18 years of age or older
• There should be no criminal histories against the applicant.
• The scope of business must be legally permitted.

Documents required for Trade License

The first step to acquire a trade license is filling and submitting the trade license application form along with necessary documents to the concerned Municipal Corporation. For different types of businesses, various documents are needed :

• Application form duly filled
• Incorporation certificate and PAN card have to be submitted if the application is a Firm, LLP, or a Company.
• If an individual person is applying, then an Aadhaar Card has to be submitted along with the application form
• In the case of rented property, lease document, and consent from the owner has to be provided.
• Latest receipt of Municipal Property tax paid.
• No objection certificate from an immediate neighbor.
• Approved layout plan of business premise showing areas defined for work, rest, coking, etc.
• Katha Certificate
• Katha Extracts
• Sanction Plan
• Occupancy Certificate

Time to process issuing a Trade License Certificate

In a metro or A city, it takes 1 week to 10 days for issuing a Trade License. This time-window is longer for smaller towns and rural areas.

Renewal of Trade License

In India, a trade license is reissued from 1st January to 31st March. Trade licenses issued by the municipal authority are valid for only one year, thus the request for renewal must be approved each year.

The business owner has to apply for renewal within 30 days of the date of the expiry of a trade license,.There is a penalty if there is a delay in renewing the license. The amount of penalty depends on the laws and regulations of the respected Municipal Authority of state.

Documents to be submitted for Trade licence renewal

• Original Trade License
• Receipt of latest property tax paid
• Challans for the previous year

Penalties

Trade License owners must comply with various rules and regulations. If an individual fails to comply with trade license regulations or the company has started its operation without a trade license, then the owner of a business will have to pay fine and could face legal actions.

Points to keep in Mind for obtaining Trade License

• Municipal Authority provides a trade license for any specific trade or business activity.
• When it comes to trade licenses, each State has its own rules and regulations.
• Fees for trade licenses depend on the type of company or trade to which they are applied.
• A registered company with a trade license holds more goodwill and client inflow as compared to unregistered or illegally run businesses.
• Investors invest in certified businesses or trades.
• There is a balance in society when it comes to trade and industry, as everyone is following similar laws & regulations.

Frequently Asked Questions ?