What Is Trade License?
Trade License is a certificate issued by the municipal corporation to the registered applicant giving authorization of starting any type of trade or business in a particular area or location. It does not allow the license holder to use the same license for any other trade or business. It is governed by the respective state laws under the Municipal Corporation act by the state government. Trade licenses are published by the authorized departments of the municipal corporations. Starting a business without obtaining a trade license may result in penalty or even termination of business. We can say that Trade license is similar to a driving license which requires a driver to drive a car.
The license department is the authorized administration of the municipal corporation which publishes licenses after consultation with other specialized departments. It is important for business establishments to take fundamental licenses from the License department before starting manufacturing, exchange or storage of any activity/commodity. The application should be filed to the commissioner of Municipal Corporation before 30 days of the commencement of the business.
Why Trade License?
The main motive of issuing trade license is to control trade location by restricting the people from executing certain types of businesses from their home location. It maintains the business environment as well as the local environment. Trade license can only be issued to commercial premises where the government has not banned any trade activities. The trade license ensures that license holder is following the relevant rules, guidelines and obeying the safety measures specified by the government. It is issued to safeguard the public from the health hazards and nuisances which may rise if the license will not be issued. Another purpose of issuing trade license is to ensure that no person will carry out any sort of unethical trade practices and fulfill their responsibilities efficiently.
Eligibility For A Trade License
Trade license is issued by the municipal corporation depending upon the eligibility of a particular trader/business. Every trader/business needs to meet certain eligibility criteria to apply for trade license. Don’t fill the trade license form in case you are not eligible.
Licensing Authority For Trade License
Trade license is issued by the license department of Municipal Corporation in consultation with various departments such as health, fire brigade, engineering etc. Licensing authority grants permission to the traders/businesses through letters or documents/certificates to carry on their business or trade at their business location. Every state has its own local government rules & regulations and therefore the procedure of issuing trade license varies from state to state.
For Example – In case of Delhi, trade license is provided by the Delhi Municipal corporation department whereas in case of Haryana, trade license
is issued by Haryana Municipal Corporation.
Types Of Trade License
There are three types of trade licenses –
Shop License – Shop license is issued to persons who want to open any type of retail businesses.
For ex – Grocery shops, Barbers shops, Dhobi shops, shops involved in selling of firewood, Candle manufacturing, Cracker manufacturing
Industrial License – Industrial license is issued to small, medium and large industrial units.
Food Establishment License – Food establishment license (FSSAI Registration) is issued
to persons who want to enter into food & beverage industry by opening cafes, bakeries, restaurants, hotels, vegetable shops, meat shops etc.
What Are The Benefits Of Trade License?
The benefits of trade license are as follows –
Legal Entity – A business holding a trade license will be considered as a legal entity. It also helps in attracting new investors and enjoys
Managing of Business & Personal Finances – It helps in managing your business and personal finances separately and identify business
profits & losses.
Measure of Competence – Every business has an exclusive right to operate in his commercial space without any fear of shutting down
after trade license registration. It provides confidence to the businessman to trade freely without any hassle.
Save You From Paying Fees & Penalties – It saves you from paying any type of fine or penalty and even from business termination too.
Ensures Safety – It provides safety measures and guidelines to businesses which can be of great importance to your business.
Documents Required For Trade License Registration
Documents for trade license registration vary as per structure of your business. The documents required for trade license are as follows –
Private Limited Company
MOA & AOA (with form-32, form 18 & others)
Trade license certificate
Rent agreement (if rented property)
Property tax receipt
Previous trade license (If exists)
NOC from the fire authority.
NOC from the pollution authority
NOC from excise authority
NOC from drug authority
NOC from food department
NOC from SARAI
Permission from RBI
Permission from IRDA
Document of proprietorship/Document of Trust agreement
Property tax receipt
Previous trade license (If not applying first time)
Lease deed/Rent agreement (if rented property)
Rent receipt (If rented property)
Property tax receipt (If owned property)
Lease deed/rent agreement
Previous trade license (If not applying first time)
Validity Of Trade License
Trade license is a mandatory requirement for every individual engaged in any kind of trade or business. The validity of trade license is 1 year.
Every individual applying for trademark registration can easily apply online & download trade license certificate directly from the website with the help of SS Auditors. A registered person needs to follow rules, regulations and other provisions in relation to trademark registration. In case of
any non-compliance or negligence or initiating business operations without a trade license will be liable for fines & penalties. However, legal action may also be taken against the defaulter.
Trade License Renewal
Trade license renewal is a process of renewing the trade license by the trader/business before the expiry date of the license. The validity of trade license registration is 1 year. Therefore, it is essential for the trader/business to renew the trade license within 30 days from the expiry date of the
trade license. In case the renewal process is delayed by the trader/business, it may be liable for fines & penalties as per the rules & regulations framed by issuing authority. As per statistics, Indian licenses are renewed every year.
Important Points To Be Noted About Trade License
1 Trade license is issued by the Municipal corporation is exclusively for the individuals engaged in trade/business.
2 Every municipal corporation issuing trade license has its own rules & regulations which vary from state to state.
3 The fee structure of the trade license varies depending upon the nature of the business.
4 It ensures ethical business practices to be performed by the traders in accordance with safety measures & guidelines.
5 It is necessary to obtain a trade license before starting business operations otherwise you will be liable for fines & penalties or it may even
result in business closure.