What is Trade License?
Trade License is a mandatory registration required to start a business in India. It is a document that allows an applicant (who wants to start a business) to commence it in a particular trade in specific area or location. Respective State Government is authorized body that issues trade licenses that assures an entrepreneur to start a business. Trade License does not allow an applicant to trade in one particular business only and does not pass any kind of property ownership.
Trade License is regulated by Municipal Corporation acts by the State Government and issued after consulting with departments like health, fire, engineering, etc. Set of rules, regulations and guidelines are to be followed by an enterprise that gets a trade license. Trade License affirms that an enterprise or business is not conducting any unethical methods or using hazardous items that may harm people living in defined area or locality. Its issuance ensures government to regulate trade activities across the nation.
Trade license Validity and Renewal
The validity of Trade License is for 1 year and can be renewed every year. The certificate can be renewed between Jan 1 Jan to March 31st.
The applicant needs to submit the renewal application within 30 days from the date of expiry of trade license certificate.
Also Read: How to Write a Business Plan?
Documents required to be submitted for renewal:
- Previous year challans
- Original copy of the Trade License
- Updated property tax paid receipt
Procedure for Trade License Application
To apply for Trade License, applicants are required to visit the official website of their specific state and fill in the application form online. Once the application form is filled and submitted with the required documents, the specified Municipal Corporation of that particular state will verify and approve the loan application, if satisfied with the submitted documents. One can also check the status online by entering the application number with a registered mobile number using official website of their specific state.
- Must be a citizen of India
- Minimum age of the applicant should be 18 years
- No criminal records under the name of the applicant
- Business must be legally acceptable
- Application needs to be submitted before 30 days from the start of business
- Shop License: Small businesses and manufacturers, and dangerous businesses like sale of crackers and fireworks, etc.
- Industries License: MSME manufacturing factories
- Food Establishment License: Bakeries, Food stalls, canteens, restaurants, hotels, and sale of meat & vegetables, etc.
Also Read: MSME Loan for New Business in India
It generally takes approximately 7-10 working days in the processing of trade license application in major cities and takes a bit longer in small cities.
- Application Form and passport-sized photographs
- Applicant’s Aadhar Card
- Certified layout plan of trade building displaying business, working or washing or resting areas
- PAN card and Incorporation Certificate, if an applicant files for a firm, company or LLP
- Katha Certificate & Extracts
- Recent Municipality Property Tax Payment Receipt
- Consent letter from the owner of the property
- Lease Documents
- NOC from immediate neighbor
- Occupancy certificate (OC)
- Sanction Plan
Trade License is an organized way to regulate any business based at any location or area. Trade License ensures that due to hazardous or improper trade, health of citizens of India is not affected. Any business running without trade license is an offence and shall have to pay substantial penalty followed by prosecution. The fee charged for a trade license depends on the nature of the business and varies from state to state that shall be defined the Municipal Corporation of a State Government. Eventually, it can lead to closure of business, if it does not abide by the pre-requisites.