If you are planning to start your own business Trade license registration is very much essential. It is one of the most important documents required to commence a trade or a business in a particular corporation/municipal limits.
Let us know what a Trade License is all about? It is nothing but a license or a certificate that gives the permission to the applicant to start a particular trade or a business in a particular area or a location. However, the license does not allow the holder to start any other trade or business than for it is issued. Moreover, this kind of a license does not pass on any kind of ownership property to the holder of the license.
Trade license was introduced in the country and is being regulated through the municipal act by the state governments in the last forty years. This is to ensure that no individual or bodies are affected by the nuisance and the health hazards of any trade or business.
The government has made compulsory to carry out any particular business in a particular area to ensure that no one is carrying out any illegal trade practices. The license brings a harmony in the society that every business follows the relevant rules and the guidelines obeying the safety measures. The core objective of issuing this license is to have control over the locations by restricting the people from executing certain forms of business practices from their residence to maintain a clean business environment and to keep the locality environment-friendly.
Who can issue a Trade License?
It is issued by the licensing authorities or the departments of the municipality or by the corporation in various departments like industries, engineering, health etc. The government of India authorizes the license in a manner to regulate in various cities across the country. It grants permission by way of certificates or documents to undertake any trade where it is located. Trade license varies state to state depending on the local government agencies rules and the regulations.
Different categories of trade license
- Industries license: Small, medium and large scale manufacturing units/ 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 stalls, canteens, meat & vegetable stalls, bakeries etc.
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
Documents need to be submitted for Trade License
In order to apply for a trade license, the applicant is required to make an application and submit the same to the concerned Municipal office or the Corporation located in their jurisdiction along with all the necessary documents.
There are different documents that are required to be provided depending on the type of business intended to carry on.
- Application in the prescribed Form
- If the applicant is any Firm, LLP or a Company, their PAN Card, along with the incorporation certificate.
- In the case of an individual applicant, his/her Aadhaar Card is mandatory.
- Latest Property Tax Payment Receipt.
- Lease documents or No Objection Certificate from the owner of the property in case of rented properties.
- No Objection Certificate (NOC) from your immediate neighbour
- A certified layout plan of your trade building showing the business, working or washing, or resting areas
- Katha extracts
- Katha certificate
- Sanction plan
- Occupancy certificate (OC)
Normally it may take 7-10 working days to process the application of Trade license in metro cities. However, in other small cities and rural areas, it may take a longer time.
Trade license Renewal
Statically, trade licenses in India are renewed from January 1st to March 31st. The validity of a license issued by the municipal authority is for a period of one year and required to be renewed every year.
The application for renewal of the license is to be made within thirty days from the date of its expiry. In case the renewal process is delayed, then it may attract a penalty depending upon the rules and regulation of the issuing authority.
Following are the documents that need to be submitted for renewal of the trade license:
- Original copy of the Trade License
- Previous year challans
- Latest property tax paid receipt
There are various other provisions, rules, and regulations that are required to be followed by the registered person. In case of failure to comply with the registration requirements of trade license and commencing any trade activity before the issuance of this license, the person in the default will be liable to pay prescribed penalty. Furthermore, legal action will also be taken against the defaulter.
Important points to be noted
- The Trade license issued by the municipal authority is exclusively meant for the trade or business.
- Rules and regulations in relation to the issuance of a trade license vary from state to state.
- The fee structure for the issuance of the license differs based on the nature of the business.
- A business granted with this license will enjoy greater goodwill than an unregistered entity and subsequently attracts more customers and investors.
- This also ensures that ethical business practice is performed by the traders as they have to follow safety measures and guidelines.
- If a person does not apply for the license or before the grant of the license as required under law and commences any trade or business activity other than the relevant business, the government 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.
To obtain a Trade License in Bangalore has now become even easier. The onus of making application lies entirely on the business owner. However, the owner of the premises can also apply to seek trade license. In the city of Bangalore, the BBMP issues the trade license to shops and industries having the place of business within its jurisdiction. The trade license is area specific and needs to be obtained from all locations where a particular business or a trade activity is carried out.
As the entire system is computerized, one can also apply for the Trade license online.
So if you are planning to engage in any business or a trade activity in the near future make sure that you obtain a Trade license certificate from the concerned department to be on the safer side.
If you have any further related queries with respect to a trade license feel free to speak to our experts at Aavana.