Overview of Trade License

Nowadays, every business, whether small or big, needs to obtain a Trade License for starting its business operations. Further, the State Government or the respective Municipal Corporation has the authority to issue a Trade license.

A Trade License acts as permission for the business entities to carry out their functions and business operations. However, it shall be taken into consideration that this license does not provide any other right to the applicant than the one mentioned.

A Municipal Corporation can issue trade license only after consulting with the departments, such as Estate, Health, Engineering, and any other of the same type.

Further, an applicant needs to apply for Trade License, together with the documents required at least 230 days prior to starting the business operations.

Objective of Trade License

The main objective of a Trade License is to make sure that no harm has been caused to the health of the citizens, by the activities carried out by the business.

Also, a Trade License is granted only after the due adherence to the safety guidelines, standards, and pertinent laws.

Eligibility Criteria to obtain Trade License

In India, the key requirements for obtaining Trade License are as follows:

• The applicant must of at least 18 years;
• The applicant must not have any previous criminal records;
• The Business must be of legal nature;

Need to obtain Trade License

The Reasons for obtaining a Trade License in India are as follows:

• To control and monitor the businesses flourishing in the market;
• To check and administer the activities of a particular business;
• To confirm that the business activities do not cause any harm to the public;
• To assure that both authorities and general public comply with the rules and regulations of the license;
• To forbid people from carrying out the certain business operation from their home location;

Authority to Regulate Trade License in India

Only the State Government or the Municipal Corporation of a respective place has the right to issue and regulate the provisions of the Trade License. 

Different Categories of Trade License

The different categories of Trade License are as follows:

Industrial License

All the Manufacturing industries regardless of the size, needs to apply for Industrial License.

Shop License

Anyone who wants to start s retail shop or want to indulge in the dangerous and hazardous activities, such as the cracker manufacturer, candle manufacture, firewood shop, etc. needs to obtain a Shop License.

Food and Establishment License

All the Food Businesses, such as Hotels, Food Stalls, Restaurants, Canteen, etc., needs to obtain Food and Establishment License.

Facts to Consider While Applying for Trade License

The factors to consider while applying for Trade License are as follows:

• Only the Municipal Corporation and State Government has the authority to issue a Trade license;
• It can only be used for the operations for which it is issued;
• All the rules, regulation, process, time-limit, fee structure, etc., concerning a trade license varies from state to state;
• It assists the business in having a better brand image, goodwill, and provides a competitive advantage as well;
• All the Business activities must be of legal nature;

Documents needed for obtaining Trade License in India

In India, the set of documents needed for obtaining Trade License are as follows:  

• Application Form;
• In case the applicant is a “Company”, then a copy of MOA and AOA, together with Certificate of Incorporation is required;
• In case the applicant is an “LLP” (Limited Liability Partnership), then a copy of the LLP agreement is required;
• In case the applicant is a “Partnership Firm”, then a copy of the drafted Partnership Deed is required;
• PAN Card details;
• An individual needs to submit his/ her Aadhar and PAN;
• An NOC from the immediate neighbour of the premise being used for business operations;
• Evidence of the last Municipality tax paid, such as a receipt, tax invoice, etc.
• Katha Certificate and extracts;
• Plan Layout of the Sanctioned Plan;
• A cancelled cheque;
• A copy of the Bank Statement;
• Documentary proof of the premise being used for trade;
• A copy of the Property Tax Receipt;
• Latest Income Tax Return (ITR);

Process to obtain an online Trade License

The steps involved in the Process to obtain an online Trade License are as follows:

• In the first step the applicant needs to apply to the regulatory authority of a particular municipal area where such a business is situated;
• Now, the applicant needs to furnish an application form comprising of the complete details as follows:
• Details of the Trade License;
• Details concerning applicant’s Name and Address;

• Details concerning Business Name and Address;

• Details regarding the types of license already issued;
• After successfully submitting the application form, together with the required documents, the said applicant then needs to pay the fee prescribed for registration;
• Lastly, when the process of registration is complete, the applicant will then receive a transaction number on his/ her registered email and mobile number for future reference;

Validity Period of a Trade License

A Trade License remains valid for a period of one year. That means the same license is then needed to be timely renewed for carrying out business activities.

Renewal of Trade License in India

The Trade License holder needs to get the Trade License renewed on an annual basis. However, the same is possible only after applying for the process of renewal.

Also, the period for obtaining the renewal of the license is from 01^st January to 31^st March of every year.

Fee Structure for obtaining Online Trade License

The fee for obtaining an online Trade License varies from one state to another state. Also, the same is determined based on the regulations prevailing in that particular state.

However, there are some states that charge fees on an annual basis. In contrast, the other states calculate the same on the basis of the percentage of the annual business turnover.

Moreover, it shall be taken into consideration that there are a few states which have been exempted by the authorities from obtaining Trade License. For example, MSMEs situated in Delhi.

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