What is a Trade License?
A trade license is a document/certificate that gives the permission to a person seeking to commence a particular trade or business in a particular area/location. This license does not pass on any kind of property ownership to the holder of the license. Furthermore, It does not even allow the applicant to do other trade or business than for what the license is issued. In the last forty years, trade license has been introduced in the country and is being regulated through municipal corporation acts by the state governments. You must make the application within 30 days of commencement of business.
Why Trade License?
- A trade license is a permission to carry on a specific trade or business at the premises for which it has been issued.
- Most importantly, the trade licence is to reduce the people from making their residential area as their business location.
- The aim to acquire trade license in India is to control business thriving in the market. It is a way to regulate and keep a check that business activities cause no harm or health hazard nor any nuisance in the area of the business or locality.
- Additionally, it proves that the business activities are under government vigilance.
- It also provides assurance to the people and authorities that the applicant follows proper rules and regulations, and extra care while carrying out the business.
- The standard guidelines must be followed and it is also important not to use any unethical or hazardous substance or materials which can cause problems to other humans
Benefits of Trade Licence Registration
- Growth: It helps to grow the prestige of the firm and attract the customers and investors in it. Operating as a licensed business may provide you with access to certain groups that you would be unable to join or participate in if you operate under your personal name. Companies such as the better business bureau, investment groups, and other business-oriented organizations may not permit you to join if your company does not have a license.
- Legal Entity: In order for a business to be a legal entity it needs to have a trade license. Additionally, as stated by the Municipal authority in which the business is located, the business needs to follow rules and regulation as prescribed.
- A Measure of Competence: With a license, a business can operate in a commercial space, without fear of being shut down. This also provides a display of confidence and competence of the business.
Who can issue a Trade license?
It is issued by the licensing department of the municipal corporation in various departments like industries, engineering, health etc.
The government of India authorizes the license in a manner to regulate in cities across the country. It grants permission by the way of letters or documents/certificates to carry on any business or trade where it is located. However, the issuance of the license varies from state to state depending on the local government agencies (Municipals) rule and regulations.
Different Categories of Trade License
- Industrial license: small, medium and large scale manufacturing factories
- Shop license: Dangerous and Offensive trades like a sale of firewood, cracker manufacturer, candle manufacturer, barber shop, dhobi shop etc.
- Food establishment license: Restaurants, hotels, food stall, canteen, the sale of meat & vegetables, bakeries and so on.
Which Businesses need a Trade Licence Certificate
The following businesses need a Trade License Certificate to operate:
- All Food Serving Premises :
- Hotels, Restaurants, canteens, Malls, theaters, Clubs, bakeries and confectionery shops, Snack shops, Food stalls, Retailers and traders of goods, Daily need stores.
- Service Trades :
- Barber shops, Cyber cafes, timber shops, all small medium scale industries, manufacturing units.
- Manufacturing Units/ Industries:
- All the Manufacturing and processing units, Small and medium and large scale industries, Cafe’s.
Eligibility for a Trade license
- The applicant must have crossed the age of 18 years
- The applicant must not have any criminal records
- Business must be legally permissible.
Processing Time
In general, it takes 7-10 days time to process the application of Trade license in metro cities. However, in other small cities and rural areas, it takes longer. You can obtain trade license in certain states immediately at the time of payment and submission of form online.
Important points to Remember when Obtaining a Trade License
- The Trade license issued by the municipal authority is exclusively for the Trade or business.
- Rules and regulations in relation to the issuance of the license varies from state to state
- The fee structure for the issuance of the license also differs based on the nature of the business
- A business granted with this license will enjoy a greater goodwill than an unregistered entity and subsequently attracts more customers and investors.
- This also ensures ethical business practice is performed by the traders as they have to follow safety measures and guidelines.
- If a person doesn’t apply for the license or before the grant of the license as required under law and commences any trade or business activity then the relevant government (authority) can impose fines and penalty as per their rules and regulation. The failure to comply with pre-requisites of the trade license can also result in the closure of a business.
FAQs
Running an unapproved Trade is an offense. As a result, the concerned authorities may seize or lock your Trade business with or without prior intimation.
In the case, that the license holder is violating the license conditions and disturbance to neighbours or the environment.
Yes, a Trade License is required irrespective of which line of business you are in. Any business that exchanges goods or services for money, has to have this license. In the case of a restaurant, you require a Food Establishment license.
Trade License is a license or permission issued by a municipal corporation granting permission to carry on a particular business at a particular address. It ensures that the citizens are not adversely affected by health hazard and nuisance by the improper carrying of trade.