Are you thinking about starting a new business? The trade license is important for establishing a business or trade within a municipal limit. We will explain the benefits of the trade license in a brief manner.
Overview
Trade License Registration – As the name suggests, a trade license is a license to conduct trade. The administrative authorities of the location generally issue it out of which you intend to carry out your business. It can be in the form of a certificate or a registration number. In India, where there are multiple layers of administration, the issuance of a trade license is done by the lowest administrative body, the municipal corporation of the locality where the business is to be conducted. This is because the municipal body has physical access to the location of the business and can verify the facility or premises if needed.
To obtain a trade license, one has to complete certain formalities and meet certain guidelines to become eligible to conduct business. Each municipal corporation can set its procedures and requirements depending on the municipality’s infrastructure.
It must be noted that the word trade license is a broad term. There is no specific license called a trade license. Different types of licenses fall under the definition of trade license. This includes the Food Safety and Standards Authority of India (FSSAI) license, Shops, and establishments certificate, manufacturing license etc.
What Is a Trade License?
A trade license is like a permission slip from the government that says it’s okay for someone to start a business. The legal obligation to ensure that a company is morally and legally compliant. If someone starts a business without a trade license, they might get in trouble and have to pay a big fine and face legal consequences.
Why Trade License?
- The government keeps an eye on trade companies to make sure they abide by the laws and regulations
- They want to protect public health, so they make sure businesses operate safely
- The government may set restrictions on certain commercial operations to keep everyone safe
- Business owners have responsibilities they must follow, and the government supervises them
- If a business has an E-trade license, it means they have shown they are not doing anything illegal or unethical.
What Is the Installation License?
If a business uses big machines, they need a special document called an installation license. The TPO (Trade Promotion Organisation) gives this license. The person who wants the license has to give details about the machine and show how it will be set up. Only business zones and not residential areas are allowed to have machines that are larger than 5 HP. After getting the installation license, the applicant has to send it to the council for approval.
Who Can Issue a Trade License?
A unique document known as a trade license enables someone to launch a business legally. The municipality or local government body, such as the city or town council, is responsible for issuing this license. You can also get in touch with our experts to resolve your queries and get clarity on availing the trade license.
Categories of Trade License
There are three categories under which a new trade license is granted:
- Industrial License: This is for big, medium, and small businesses that make things
- Shop License: This is for businesses that do dangerous things like make candles or fireworks, or sell firewood
- Food & Shop Establishment License: This is for businesses that sell food, like restaurants or food stalls.
Businesses Requiring Trade License
- Food Establishments: This includes places that make and serve food, like restaurants, cafes, and food trucks
- Retail Stores: Stores that sell physical products, like clothing stores and supermarkets, usually need a trade license
- Service Providers: Businesses like hair salons, spas, and fitness centers may also need a trade license
- Construction Companies: Builders, contractors, and other construction-related businesses are often required to have a trade license
- Health Care Providers: Doctors and dentists owning their clinic and servicing the public should also have a trade license
- Transportation Companies: Companies that provide services in the transportation sector also require a trade license.
Benefits Of Having A Trade License
- One of the major benefits is that the licensed business enjoys goodwill and can attract more customers. This is the era where customers value quality rather than quantity, so it’s important to have a trade license registration.
- Those companies with trade licenses prove that they have better business practices, and those who do better can attract more investors and business organizations for collaboration purposes.
- If the person cannot get the license, then the government has the right to impose the charges on any such business, which may even lead to a shutdown.
- It also protects the owner against any unexpected liability.
Eligibility to Apply for a Trade License
- The business must be legally registered in the area where the trade license is needed
- The business premises must meet certain standards and regulations, such as having enough space, being clean, and having safe working conditions
- Businesses involved in illegal activities will not be allowed
- All the Zoning laws have to be met by the business
- All required documentation, including evidence of business registration, identification verification, and proof of property ownership or lease, must be submitted by the applicant
- The appropriate payments for acquiring the trade license must be paid by the applicant.
Documents Required for Obtaining Business Trade License
- Proof of identity
- Proof of address
- Documents connected with the building, which could be a property tax receipt (for an own building) or rental agreement (for a rented building)
- Affidavit declaring the nature and location of trade in a non-judicial paper attested by a Notary Public. The non-judicial stamp paper will cost ₹20
- Passport-size photograph of the applicant
- NOC (No Objection Certificate) from the District Fire Officer
- NOC (No Objection Certificate) from the Pollution Control Board
- Certificate from the Inspector of Factories if more than nine workers in the employment
- Installation license (explained further).
Trade License Fees
The rates for trade licenses vary by state since they are issued by the different state government bodies (Municipals). The license costs are set by the rules and regulations in effect in particular states. Trade license fees are imposed on a yearly basis in several states. Other states determine it depending on the proportion of yearly firm turnover.
Registration Procedure to Obtain Trade License
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Urban Areas
- Step 1: Visit the official website and obtain Form-1 by paying the required fee
- Step 2: Fill in all the necessary details in the form, which includes personal information, the purpose of trade, and tax details
- Step 3: Submit the application to the Commissioner
- Step 4: The Commissioner will inspect the application, and if everything is satisfactory and all necessary documents are provided, a fee payment will be required
- Step 5: The license will be granted within a week of payment of the cost
- Step 6: It is also important to renew the trade license online by filling the form before 1 March for Municipalities and 45 days prior to the end of the year in specified corporation zones.
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Panchayat
- Step 1: Visit official website and find the prescribed form
- Step 2: Fill in the form and attach documents
- Step 3: Submit the application to the sanitary inspector
- Step 4: The inspector will fix an appointment date and inform you via SMS or email
- Step 5: On the appointment day, the inspector will visit your business premises to check whether everything is in the right precautionary manner
- Step 6: A report will be made and if everything is satisfactory, the fee details will be notified online
- Step 7: The sanitary officer will then verify the report and remove any irregularities
- Step 8: Post verification, the application will be approved
- Step 9: The application will be returned for re-checking
- Step 10: Once the application is approved, a demand notice for the fee will be specified
- Step 11: After completing the payment process, the online trade license will be granted.
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Online Registration of Trade License
- Step 1: Go to the official website for trade license registration
- Step 2: Provide all the necessary details
- Step 3: Fill in the credentials and log into the site
- Step 4: Click on the ‘Applications’ tab and select the trade license certificate tab
- Step 5: Complete the application form with the essential information and attach the required paperwork
- Step 6: Submit the application form and receive an acknowledgment slip
- Step 7: The application for verification will be delivered to the ARO of the Zone
- Step 8: After on-site verification, a report will be sent to the Zonal officer
- Step 9: If everything is satisfactory, you can make the fee payment online
- Step 10: Once the payment is complete, the online trade license registration will be issued via email.
How to Renew a Trade License Online?
After registering for TN eSevai, complete the following steps to request an encumbrance certificate and renew your trade license.
- Step 1: Go to the TN eSevai portal and log in
- Step 2: Click on the ‘Services’ button
- Step 3: Choose ‘Greater Chennai Corporation’ or the other state you need from the options
- Step 4: Select ‘COC-401 Renewal of Trade License’
- Step 5: press on ‘Proceed’
- Step 6: Fill in the ‘Zone no’, ‘Division Code’, and ‘License Number’
- Step 7: Click on ‘Search’
- Step 8: Check that the basic details on the form are correct
- Step 9: For “Amount to be Paid,” enter the amount you wish to pay
- Step 10: Press ‘Make Payment’
- Step 11: After making payment, click on ‘Get Receipt’ to download the receipt.
Conclusion
While most regulatory formalities have been moved online, some procedures are more effective offline. One such is the registration of a license. The forms and the formalities differ from municipality to municipality. This can confuse you, especially if you operate your business out of multiple locations. So it is always better to engage an experienced expert who knows the ins and outs of the registration process. If you have any more queries on any other registration process or need help registering your trade license, contact our team of experts today and get expert guidance with your requirements from our highly qualified experts.
FAQs
What is a Trade License application?
Trade license application is certain paperwork and submit it to the local government officials if you want to launch a business there. You must record the nature of your company's operations, its location, its owners, as well as other crucial information.
How much time taken to complete the process of obtaining a trade license?
It depends on the type of business. It can be finished in days or sometimes it can also take months.
What are the penal provisions for violating the measures of particular trade licensing?
The penalty depends on the severity of the crime.
Is a trade license mandatory in Tamilnadu?
Yes, it is mandatory to have a trade license if you have a business in tamilnadu
How can I get a trade license in West Bengal?
Get in touch with Vakilsearch. Our experts will get your trade license quickly and take care of filing all the information.
What is a local trade license?
A local trade license is issued by the local government to businesses that operate in a specific area. It assures that the business follows all the rules and is free to operate in the specific area.
Is a trade license mandatory for GST registration?
Yes, To register for GST, you need to have a trade license which is a really important paper.
Can I trade without a GST number?
No, If your business must be registered for GST, then you need a GST number to trade.
What is the GST registration fee?
GST registration is FREE if you do it by yourself. But if you do it through a service provider the charges may vary. Vakilsearch offers GST registration at an affordable price.
What is the GST turnover limit?
In India, most businesses can make up to ₹40 lakhs before they need to register for GST. But in some states, the limit is lower, only ₹20 lakhs.
