what is trade license in India l Trade License in India

A Trade License is a permission to do Specific Trade / Business at the premises for which it has been issued. The Municipal Corporation of the place, where business is located, issues Trade License. In India, Trade license is one of the Important documents required for trade license.

This article explains trade license meaning, types of Trade Licenses issued in India, need of Trade License, documents required for trade license, trade license registration and other related questions.

Topics Covered –

What is Trade License in India?

If you are searching for what is trade license in India then you are at the right platform. Trade License is the way to regulate Specific Trade / Business in a Particular Area.

Basically, Trade License is a Certificate that allows a businessman to start a particular Trade / Business in a particular area or location. However, the License does not allows-

Applicant to do any trade or business, other than the trade or business mentioned in the license which is issued.
To transfer any kind of property ownership to the holder of license.

The main objective of Trade License is to ensure that no one is severally affected by trouble and health hazard of any Trade / Business.

How many types of Licenses are issued in India for Trade?

Broadly 3 types of Trade License are issued in India.

Shop License- This License is issued to trades involved in Dangerous and Offensive trades, such as –
- Cracker Manufactures
- Candle Manufactures
- Barber Shop
- Dhobi Shop
- Sale of firewood etc.
Food Establishment License– This license is issued to –
- Restaurants
- Food Stalls
- Hotels
- Canteen
- Bakeries
- Sale of Meat and Vegetable etc.

Industries License– This License is issued to Small, Medium and Large Scale Manufacturing Industries.

What is the need for Trade License in India?

Trade License is introduced in any country to ensure that no one is severally affected by inconvenience and health hazard of any Trade / Business.

In India, It was made necessary by the government to have Trade License in order to carry out any particular business or trade in a particular area. This is to ensure that no one is carrying out any Unethical Business Practices.

It is mandatory to get Trade License in India, so that the government can regulate various trade activities in the country.

This license ensures that every business is following prescribed Rules & Safety Measures, which also led to harmony among businessmen.

Who can issue a Trade License in India?

Trade license is issued by the licensing Department of the Municipal Corporation in various departments like Industries, Engineering and Health etc.

The issuance of the license varies from State to State, depending on the Local Government i.e. Municipal rules and Regulations. For example – If anyone wants to start Health related business in Delhi, then Municipal Corporation of Delhi (MCD) will issue Health Trade License.

Eligibility Criteria:

Basic Eligibility for getting Trade License is-

- The Age of the person must be above 18 years.
- The person should not have any Criminal records.
- Business must be Eligible for the Execution of Legal Work.

Documents Required:

Following are the documents required for getting Trade License in India-

- Rent or lease Agreement, If the business premise is on lease.
- An ownership Documents, if the applicant owns the business premise.
- ID and Address proof of the Applicant.
- Certificate of Registration from the Concerned Authority.
- In the case of Company, Memorandum and Articles of Association and Certificate of Incorporation.
- Municipal Tax Receipts.

Process Time:

Generally, 7-10 days time is needed to process the application of Trade license in Metro Cities of India. However, in Small Cities and Rural areas, it takes more time.

What are the benefits of this License in India?

We can categorize the benefits of getting Trade Licence in India as under: –

- Goodwill – There will be an Increase in Goodwill, which will ultimately attract the more Customers and Investors.
- Protection from Liability – Protects the Owners against certain types of Liabilities.
- Attraction for better Business Opportunities – With better Business Practice Companies attracts various Investment groups and other Business Organizations.
- Trade License Registration – In order to do Ethical Business Practice, the person can apply for obtaining Trade License Registration, which will ensure the safety measures and guidelines
- Fine and Penalties – If a person does not get a Trade license as required under law and starts any business or trade. In such case, the government can impose fines and penalties on such person. Which can also led to closure of such business.

What is the Validity Time of this License in India?

The validity period of a Trade license issued by the Municipal Authority in India is for a period of 1 year and is required to be renewed every year.

How to renew this License in India

As we have already discussed above that the validity of a Trade License issued by the Municipal Authority in India is for a period of one year. The same is required to be renewed every year.

From the date of expiry of Trade License, the application for its renewal is to be made within 30 days. If the renewal of Trade License is delayed, then it may lead to levy of fines by the issuing authority.

Below is the list of documents that are required to be submitted for renewal of the license in India–

a. Original copy of the Trade License,

b. Previous year Challan,

c. Property Tax paid receipt.

Conclusion

We have already discussed about the trade license meaning, documents, trade license registration and procedure of obtaining Trade Licence in India. So it won’t be wrong to say that obtaining a Trade Licence is not a simple task in India. It is always good to take help of Experts. If you have any query regarding Trade Licence or you want to obtain this license, feel free to contact Manthan Experts at info@manthanexperts.com.

Knowledge Source:

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