Trade License

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Trade License

TRADE LICENSE

A trade license is simply a license or a certificate required for a business or individual to carry out operations. Usually, this license is provided by the respective state government for a particular municipal limit. This license will allow the applicant to open a business in a particular region. The applicant will have to ensure that the business is carried out as per the requirements of the license.

This license doesn't allow the applicant to run any other business than the one which it is issued for. Apart from this, the license does not allow the individual to secure the property or any form of legal entitlement of the property where the business is carried on.

WHY IS A TRADE LICENSE REQUIRED TO BE TAKEN?

Going back to 40 years, the government brought out regulations for carrying out particular businesses.  Hence this form of license is only used by a business to carry out a specific activity. These licenses would only be issued by the government to the individual to carry out particular activities within a defined locality.

The government of a particular municipality or a state would issue these licenses for businesses to carry out their activities. Securing a trade license is mandatory for a specific individual.

This license is an essential and compulsory document issued by a particular municipality. Businesses are permitted to carry out specific activities in a particular area.

These licenses are also provided to check on the business to see if they act according to the requirements of the law.

OBJECTIVES OF TRADE LICENSE

The government issues such as license to fulfil the requirements of the business. Apart from this, the trade license is issued for the following reasons:

  • To regulate businesses within a particular locality or municipality.
  • Ensure that anti-competitive practices are not followed within a particular locality or municipality.
  • To monitor the activities of a business. Apart from this, local authorities can keep a constant check on the activities conducted by a business.
  • Issuing such a license would indicate that a business is following compliance with respect to the government.
  • A local authority can check if the business is breaching any law or causing any nuisance in the society through this license.
  • Businesses with such license are more reputed in the eyes of consumers. Consumers would have more confidence in their services.
  • By securing a license, businesses would not use their residential premises to conduct any business. Hence, this form of regulation ensures that businesses are regulated.
  • This form of license also regulates the use of environment-friendly substances to conduct activities within a particular locality. Hazardous and other chemical substances are not allowed when it comes to residential and municipal limits.
  • Businesses having this form of license would take the necessary precautions while carrying out a particular activity. Businesses having this license would also follow the guidelines issued by the municipal or state government from time to time.

CLASSIFICATION OF TRADE LICENSES

Based on the amount of risk posed by the business, licenses are classified into the following:

  • Low Risk Based License

This form of license would involve any form of business that does not have a high risk. Usually, restaurants and other forms of eateries consider this license.

  • Medium Risk Based License

This type of license would be usually issued to establishments such as small scale industries and medium-sized industries.

  • High Risk Based License

This type of license is usually issued to industries and large scale establishments. Usually, this form of establishments would have higher risk of dealing with different form of materials and substances. Normally, on these premises, the standards of monitoring would be higher when compared to low and medium risk license.

ELIGIBILITY CRITERIA FOR TRADE LICENSE APPLICATION

To be eligible to apply for the above license, the applicant has to ensure the following criteria are satisfied:

  • The applicant or individual must be a major. This means the applicant must be more than 18 years of age.
  • The applicant should not have a form of convictions or criminal records.
  • The business of the applicant must not be against any provisions of law in force.

PROCEDURE FOR APPLYING FOR A TRADE LICENSE

Depending on where the applicant is located, the following requirements have to be complied with:

  • The applicant has to either apply online or offline for the trade license certification. For the online method, the applicant has to make an application and attach the prescribed documents. For the offline method (in-person) the applicant has to take all the documents to the relevant authority. With this, the applicant has to fill in the application form with the respective details for the license.
  • As per the requirement of the applicant, different states would have different processes to make an application for the license. However, the government has brought out initiatives to make systems in every state electronic.
  • The applicant has to go to the prescribed webpage to file the online trade license.
  • After this, the applicant will get a pop-up notification related to the terms and conditions which have to be adhered for the trade license.
  • The applicant has to click on the accept button for the terms and conditions.
  • Next step in the process would include the applicant to fill in necessary information and details regarding the trade license.
  • The online system for license registration has a specific mode where authentication of documents can be carried out electronically. The applicant has to perform these and submit relevant documents.
  • Once this process is carried out, the applicant will get a confirmation for successful registration of the trade license.
  • The applicant will get the confirmation regarding the same, and the applicant will receive the license within eight to eleven working days.
  • Usually, the process of receiving the trade license is faster in Metropolitan Cities when compared to rural areas.

RENEWAL OF TRADE LICENSE

The license can be renewed subject to the following conditions:

  • Usually, these licenses are renewed between 1st January to 31st March of the respective financial year.
  • This license is valid for 1 year.
  • The applicant has to make an application for the trade license in India.
  • The application can be made thirty days before the expiry of the certificate.
  • When the certificate is renewed, documents have to be submitted to the respective authority.

DOCUMENTS REQUIRED FOR TRADE LICENSE

  • Application for the License.
  • If the applicant is a corporate entity, then PAN card along with the respective company formation documents must be submitted.
  • For an individual applicant, documents such as Aadhaar Card is compulsory.
  • Property Tax Documents for the Property.
  • Lease agreement should be provided. Copies of the lease agreement.
  • Any form of Khata Extracts and Certificates.
  • Occupancy Documents.
  • No Objection Certificate from Neighbor in Case the business is located in a residential area.
  • Sanction Documents.

 

FAQ

A trade license is a document/certificate that gives permission to the applicant (person seeking to open a business) to commence a particular trade or business in a particular area/location.
Any establishment or business would require a license to operate. Hence it is mandatory to secure a trade license for a particular business. The state government usually issues trade License. Any individual having a trade license can carry out the operations of a business without any disruptions.
The trade license is issued by the various departments of the municipal corporations like industries, engineering, health, etc. The government of India authorizes the licenses in a manner to regulate in cities across the country
• Increase Credibility. • Render better exposure to financial aid. • Increase Goodwill in the target market. • Motivate investors. • Ensure fewer confrontation with legal affairs. • Ensure better sanitation within the organization. • Discourages unethical practices.
Municipal Corporation generally issues the trade license with the validity of 1 year.
The following are the types of Company: Private Limited, Public Limited, OPC, etc. Types of trade license: Shop License, Industrial license, Drug license, etc. They are not renewed as they are valid for a lifetime. They are renewed after their expiry by submission of necessary documents.
Trade licenses are important for businesses as they help in conducting business activities within a defined territory without violating any local laws. Many businesses need to get trade licenses in order to operate as they require specific permits and approvals from the relevant authorities.
To apply for a trade license, the applicant must make an application and submit the following documents to the concerned municipal authorities. 1. Application in the prescribed form 2. PAN Card along with the incorporation certificate if the applicant is any firm, LLP, or company. 3. Aadhar is mandatory in the case of an individual applicant. 4. Latest Municipality property tax payment receipt 5. Lease documents or consent letters from the owner of the property. 6. NOC from an immediate neighbor 7. A certified layout plan of your trade building showing the business 8. Katha extracts 9. Katha Certificate 10. Sanction plan 11. Occupancy certificate
The time taken for this form of certification would depend on the respective municipal corporation. However, in urban cities, the applicant will receive the certificate faster than in a rural area.
If the license has lapsed, the applicant can make an application for renewal of the trade license. If not, the applicant has to prove to the respective municipal authority regarding the trade license.
The applicant will have to file the application for renewal of the license with the respective municipal authority. However, this must be carried out one month before the expiry of the license.
The applicant has to submit the following documents for renewal of the license: • Original Copy of the Trade License • Tax Challans of the Property • Property tax.

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