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Penalty for Violating the Trade License in India

A trade license aims to restrict conducting certain types of business from specific locations to ensure people’s safety and a healthy environment. This article brings to notice the penalty for violating the trade license in India.

What Is a Trade License?

To legally commence a business in India, you must apply for trade registration. A trade license is a document that allows the applicant to begin a particular kind of business from a specific area or location, legally. In India, state governments have the power to authorise the inception of a business in their state. The licensing department of the Municipal Corporation is the body that issues the license. 

What Are the Key Purposes of the Trade License?

Trade licenses primarily aim to keep in check that all businesses follow the rules and regulations of the particular state. Trade licenses promote ethical business practices by assuring safety measures. Such initiatives attract customers, as well as investors, thus enhancing business growth.

Some primary purposes of a trade license are as follows:

  • To maintain the goodwill of the business
  • To enhance business by attracting more customers and investors
  • To make sure the customers do not get adversely affected by any kind of health issues caused by improper trade of business
  • To affirm that the business or enterprise does not indulge in any unethical methods or hazardous items that could harm people living in the defined locality. 
  • To let the public know that the business is being performed by ethical means, ensuring compliance with the rules, and regulations laid down by the state.
  • To ensure the regulation and governance of trade activities across the country. 

Who Can Apply for a Trade License in India?

A person who wishes to apply for the trade license should meet the following criteria:

  • The applicant must be an Indian citizen
  • The applicant should not be less than 18 years of age
  • No criminal records should be associated with the applicant
  • The Applicant should be legally permissible to carry on a business
  • The business should be legally acceptable
  • The application for the trade license has to be submitted 30 days from the commencement of the business.

TRADE LICENSE REGISTRATION

How Can You Apply for a Trade License in India?

You can apply for a trade license with the help of the following steps:

  1. Visit the official website of the state in which your business will be based. 
  2. You must fill out a simple application form online and attach all the required documents
  3. Submit the documents and the application form.

The Municipal Corporation will then review your application and the uploaded documents. It usually takes up to 12 working days for the application to be processed. You can check the status of your application by visiting the same website. If the authority is satisfied, your application to obtain the trade license will be granted.

What Are the Documents Needed to Apply for a Trade License?

The following documents will be required:

  1. Passport-sized photographs of the applicant
  2. Aadhar card of the applicant
  3. A copy of the certified layout plan for the trade building.
  4. PAN card copy
  5. Certificate of Incorporation (if the application is for a firm, LLP, or company)
  6. Copy of Recent Municipality Property Tax receipt
  7. NOC from the immediate neighbour
  8. Consent letter from the property’s owner
  9. Documents of lease
  10. Occupancy Certificate (OC)
  11. Sanction plan
  12. Katha Certificate and extracts.

Is There Any Penalty for Violating the Trade License in India?

Registered businesses must obey the rules and regulations laid down under the terms of the trade license. Non-compliance to the terms could result in strict penalisation for the owner or the business. 

A few of such penalties for the contravention of the provisions of the trade license are as follows:

  • Commencement of business without obtaining a Trade License could attract penal provisions in the form of fees and penalties on such a person. It could also lead to the shutting down of the business.
  • Causing nuisance in the neighbourhood or the surrounding would come under the violation of the trade license. In such cases, the license might be cancelled or revoked. 
  • A prescribed penalty may be charged upon the entity for violating the terms or applicable laws of the trade license. 
  • If there is any delay in the trade license renewal, a fine of 50% of the license fee may be levied. 
  • There could be cases where appropriate legal action may be taken against the defaulting entity.

The basic aim behind such stringent rules and penalties is to discourage the conduct of unethical, and illegal activities by businesses, and to ensure the maintenance of a clean, and safe environment. Such harsh penalties ensure that businesses adhere to the rules, and the regulations laid down by the law. 

Conclusion

In India, businesses have the freedom of trade and commerce. But this right becomes void if it interferes with the public’s right to life. To ensure a hassle-free registration of your business, you should hire Vakilsearch. Professionals at Vakilsearch will provide you with clarity on the incorporation process, and fulfil all your legal requirements.

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