Trade License
A trade licence is a document/certificate that allows an applicant (person who wants to open a company) to start a certain trade or business in a specific area/location. This license will allow the applicant to open a business in a particular region.
What Is A Trade License?
Trade License is defined as a certificate/document which provides permission to perform on a specific trade or business for which it’s issued. It doesn't confer ownership of property or permission for any other activity other than for which it is issued. Some authorized departments by the municipal corporations are known as License departments which issue licenses by consulting with other specialized consultative departments like Fire Brigade, Health, Engineering, Estate, and others. According to this, it’s important for any business establishment to take fundamental licenses from the License Department before manufacturing, exchange or storage of any activity/commodity. It is necessary that the business establishment must receive the application within 3 months before the commencement of the activity and 30 days after the commencement of the business activity.
What are the features of a trade license?
Features of Trade License are as follows:
- It helps in ensuring that no one should be affected by health hazards of any trade and business.
- It prohibits unethical business practices.
- Trade creates a balance in the society that every business is following rules and guidelines as prescribed by the Government.
- The government made this license mandatory to regulate the trade activities in the country.
What are the documents required for a trade license?
- Address Proof of the premises, in case of premises on lease the lease documents/agreement of lease is required.
- Identity proof
- Occupancy Certificate
- Cancelled cheque
- PAN card
- Certificate of Incorporation
What are the different types of Trade License?
Three different types of trade license
Shop License
Shop license is needed for those who would like to open a shop or an establishment to sell the products.
Industrial License
Industrial license is required for a company who is planning to open a small or mid-sized industrial unit.
Food Establishment License
Any establishment that plans for the food and beverage industry needs this license.This license applies to restaurants, cafes, meat shops, bakeries and vegetable shops.
What is the registration process of a trade license?
The registration process of any trade license may differ from state to state and license to license. The process is as follows:
1. Application
An application to the appropriate authorities, the state government, or the local corporation is required to get a trade license registration. The entire procedure may differ from one state to another.
2. Verification
In certain states, a trade license is only provided to a person once the competent authorities have verified his or her identity.
3. Time required for processing
The trade licence registration takes 10-15 days to process, and once approved, the trade licence registration may be obtained online.
Required Documents
| Acceptable Document | Document Type | Additional Details |
|---|---|---|
| Application in prescribed Format | . | . |
| PAN Card (in case of any firm, LLP or a company) with incorporation certificate | . | . |
| Lease documents or consent letter | . | . |
| Latest Municipality Property Tax Payment Receipt. | . | . |
| Aadhaar Card (in case of individual) | . | . |
| NOC from your immediate neighbor | . | . |
| A certified layout plan of your trade building showing the business, working or washing or resting areas | . | . |
FAQs
You Ask, We Answer
a. The applicant must have crossed the age of 18 years b. The applicant must not have any criminal records c. Business must be legally permissible.
Trade license ensures that business carried within the area is consistent with the rules, standards and safety guidelines. You just cannot setup a mini manufacturing unit in your own residence. It is governed by a set of rules that licensee needs to abide by and violations can lead to the cancellation of license.
In the last forty years, trade license has been introduced within the country and is being regulated according to the municipal corporation acts by the state governments. This helps in ensuring that any individual is not severally affected by nuisance and health hazard of any trade or business. Govt. has made necessary steps for functioning out particular business or trade in a particular area and to make sure that nobody is involved in any unethical business practices. This license creates a harmony within the society that each and every business is following relevant rules, guidelines and obeying the safety guidelines. This license was made obligatory to make sure that the government can regulate various trade activities in the country. The sole objective of issuing this license is to control and regulate the locations by restricting the people from executing certain kinds of businesses from their home location for maintenance of the business environment and locality environment.
A. Industries license: small, medium and large scale manufacturing factories B. Shop license: Dangerous and Offensive trades like a sale of firewood, cracker manufacturer, candle manufacturer, barber shop, dhobi shop etc. C. Food establishment license: Restaurants, hotels, food stall, canteen, the sale of meat & vegetables, bakeries etc.
Statically, trade licenses in India are renewed in between January 1st to March 31st. It is for one year and required renewal on yearly basis. The application for renewal is to be made within thirty days from the date of its expiry. If the process is delayed, then it may attract fine depending upon the rules and regulation of the issuing authority. Following are the documents that need to be submitted for renewal of the license– a. Original copy of the trade License; b. Previous year challans; c. Up to date property tax paid receipt.
Documents can differ from municipality to municipality but I will be sharing a general list of documents. Individual’s application - duly filled up forms with KYC documents (photo id and address proof) of all individuals and proof of occupancy of business: • Tax bill is required if you are owner of the flat. • Rent agreement is required if you are on a rented flat. • If relative granted rent free accommodation like the flat is in your father’s name and you want trade license in your name then a consent letter from the owner along with the tax bill. In case of companies following documents are necessary: • Memorandum/Articles of Association • Declaration in Form No. 32 • Form No. 18
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