Trade License

What do you mean by Trade License?

The first thing you have to decide while commencing your business is that whether you want to deal in goods or services or not and the place/ location of your business. After that you are required to obtain license once you decide upon the above two things.

In a specific locality, the government regulates the specific businesses through this trade license. Such trade license to carry out the activities of a particular trade in a particular location is issued by the Municipal Corporation of the place/ location in order to ensure proper compliance with the relevant rules, standards and safety guidelines prevailing in the society.

What are differences between Company registration and Trade registration?

Every business owner is required to obtain trade license to provide its business a separate legal entity. According to the business scale, the promoter decides the type of entity he wants to commence. If any person carries on the activities of business without obtaining the trade license then such person shall be liable to heavy penalty and the business shall be considered as illegal entity.

When Trade License is required to obtain?

Every business is required to obtain trade license within 15 days of commencing the activities of business such as manufacture, exchange or even storage of any commodity. Moreover, applying for this trade license 3 months prior to the commencement of any business activity is mandatory in some states.

Who are authorized to regulates the Trade License?

State government with the help of the Municipal Corporation of the location in which the business is situated the state governments regulate the trade license. Procedure of obtaining trade license, the fees for online trade license and the collection of such fees vary from state to state. There are generally two levels to charge the fees, in some cities it is charged as the annual fees while in some cities, it is calculated and charged as a percentage of business turnovers. Certain departments have been exempted from obtaining the license e.g. Micro, Small and Medium Enterprise (MSME) in Delhi.

What are the minimum criteria to obtain Trade License?

As per the governments, certain criteria are discussed below:

  • Only minors are allowed to obtain license i.e. he must have attained the age of 18 years.
  • Legal activities are to be performed by the business entities.
  • No criminal background has been identified against the owner of the business and possesses the good market image.

What are the categories of Trade License?

Type A Category

License is granted to the businesses who are engaged in the activities that are related to consumable items and eating hubs.

Type B Category

License is issued to trades such as industries, workshops, flour mills etc. which make use of locomotive power in order to carry out the functions of business.

Type C Category

In this category, license is issued to the trade involving dangerous activities such as firewood, charcoal etc.

Which documents are required to submit?

In case of Trade License

  • Business premise’s Utility Bill.
  • Rent Agreement, where the premise is not owned by the owner.
  • No Objection Certificate (NOC) from Fire Department.
  • Receipts of the municipal tax.
  • Certificate of registration under Shop and Establishment Act or Infrastructure development department etc.
  • Where person other than owner manages the premises of the business, then the Photograph, Identity proof and address proof of such person shall be required.
  • Applicant’s Identity proof
  • Company’s Permanent Account Number (PAN), where the applicant is a company.
  • Premise’s blueprint copy.

 In case of Online Trade License

Professionals are required to file an online application to obtain the Trade License along with the prescribed forms in which documents are required to be submitted. After all these procedure, authorities issues the trade license.

In case of Renewal of Trade License

Such trade license is required to be renewed from time to time basis as it is not a one-time license. Some states and cities also require annual fees for the continuity of the license. The time period for renewal of trade license starts from 1st January to 31st March of every year. Renewal application shall be made at least 30 days before the commencement of the year for which renewal is sought for. Where there is any delay in obtaining the renewal license, then fine of 50% shall be levied.

The following are the documents which are to be submitted with the application for trade license renewal:

  • Original License copy.
  • Challan of the fees paid in the previous years.
  • Receipt of Tax payment.

In case of Appeal for Denial of Application

Copy of denial along with the petition shall be submitted to Standing Committee (Health) in case online Trade License application is denied on any grounds.