Find out the key eligibility requirements and qualifications you need to secure a trade license for your business. We've got all the details to make the application process here. Read now!
Overview
Are you planning to launch a brand-new company, and have you given any thought to the necessary paperwork that will require you? A business or trade license is one of the crucial documents that must be obtained before beginning operations within the limits of a particular municipality. Allow us to provide you with a concise explanation of the benefits associated with obtaining a business license.
Trade License
A trade license is only a license or a certificate necessary for an individual or a firm to carry out their operations. In most cases, the respective state government will be the one to issue this license to operate within a given municipality’s limits. The holder of this license will be granted permission to establish a company in a specific geographic area. The person applying for the license will be responsible for the company’s day-to-day activities as per the license provisions.
The holder of this license is not permitted to operate any other kind of business save the one it is specifically issued for. Aside from this, the individual is not granted the ability to secure the property or any form of legal entitlement of the property where the company is carried out because the license does not allow it. In the past forty years, a trade licensing system has been implemented nationwide, and state governments currently govern it through municipal corporation statutes. This makes it easier to ensure that no one will be adversely affected by the annoyance or health risk posed by any particular trade or industry.
What are the Different Categories of Trade License?
- Industries license: Manufacturing establishments of all sizes need small, medium, and big licenses.
- Shop license: Dangerous and offensive enterprises such as selling firewood, making crackers or candles, operating a barber shop or laundry (dhobi) shop, and other similar businesses that fall into this category.
- Food Establishment License: A license to operate a food institution, including but not limited to restaurants, hotels, food stalls, canteens, businesses that sell meat and vegetables, bakeries, etc.
Points To Be Considered For Obtaining Trade License
The following types of documentation are necessary to apply for a commercial license:
- Address proof of the business
- ID proof of the applicant
- Aadhaar card
- PAN (For proprietorship) or firms PAN
- NOC of the neighbors (nearby property owners)
- Memorandum of Association (MOA)
Certified Layout Plan of the Office
You can submit your application for the business license to the municipal corporation online or offline.
Who Can Apply For a Trade License in India?
The following are the criteria that must be met to be eligible to apply for a business license:
- 18 years and above individuals;
- No history of prior convicts
- The law must permit the business
Online Trade License – Fees Charged
Because each state’s government entities (Municipalities) are responsible for issuing business licenses, the associated fees are not uniform from one state to the next. The rules and regulations that are in effect in each state are used to calculate the amount of money required for the license fees.
What are the Main Objectives of a Trade License?
- To oversee and supervise business operations within a specific jurisdiction
- To safeguard against unfair competition among businesses in a given area
- To verify compliance with corporate or governmental regulations by businesses
- To investigate potential legal violations or societal disruptions caused by businesses
- To monitor the use of hazardous chemicals in business practices and prevent harm to people or the environment
- To promote the use of environmentally friendly materials by businesses and preserve natural resources
- To enforce safety measures during business operations.
Offline Process to Apply for a Trade License
- Step 1: Head to the local city municipal corporation office where the business operates
- Step 2: Acquire the trade license application form
- Step 3: Complete all sections of the form with relevant information
- Step 4: Present the completed application and supporting documents to municipal corporation personnel
- Step 5: Await verification and receipt of a distinctive application number/ID
- Step 6: Return to the municipal corporation office to settle the required fees
- Step 7: Upon payment, receive the issued trade license.
Trade License Processing Time
In metropolitan areas, trade licenses are typically issued within 7-15 days upon fee payment. However, in rural and small cities, the process may take longer, extending up to 30 days following fee payment.
Note: The processing time might vary due to multiple reasons. If you are filling through Vakilsearch, a dedicated expert will be provided to give you timely updates.
Trade License Status
To check the status of their trade license application, applicants can visit the city municipal corporation website. However, procedures may differ across municipal corporation websites. Here is a general guide to view the application status:
- Step 1: Navigate to the appropriate city municipal corporation website
- Step 2: Select the ‘Citizen online services’ section
- Step 3: Choose the ‘Application Status’ option
- Step 4: Enter the application number and click ‘Get Status’
- Step 5: The status will then be presented on the screen.
Trade License Certificate Download
To obtain the trade license certificate, individuals can access the city municipal corporation website, although the steps may differ depending on the specific municipal corporation website. Here is a general outline of how to download the trade license certificate:
- Step 1: Visit the appropriate city municipal corporation website
- Step 2: Navigate to the ‘Citizen online services’ section
- Step 3: Locate and select the ‘Download Certificate’ option
- Step 4: Enter the ‘Application Number’
- Step 5: Click the ‘Download’ button to initiate the download process.
Company Registration Vs Trade License
Here is a complete outline of differences between company registration and Trade license:
| Aspect | Trade License | Company Registration |
|---|---|---|
| Definition | Authorisation by government for a specific line of commercial activity | Process of establishing a new legal corporation for commercial purposes |
| Types of Businesses Covered |
There are different types of trade licenses provided for different services as follows: IT services (OSP license), food chains (FSSAI license), drug manufacturing (Drug License), Ayurvedic products trading (Ayush License) |
Public Limited Company, Private Limited Company, Nidhi Company, Producer Company, One Person Company (OPC), Section 8 Company can be registered |
| Issuing Authority | Relevant state government authority | Registrar of Companies (ROC) |
| Purpose | Authorise existing companies to start a new line of business | Establish a new legal entity for commercial activity |
| Valid For | Specific line of business or commercial activity | Legal entity for conducting any lawful commercial activity |
| Certificate Issued | Trade License | Incorporation Certificate |
| Governed By | State regulations | Companies Act, 2013 |
| Eligibility | Required for specific business activities | Open to any person or firm for lawful commercial activities |
| Renewal | Required periodically based on state regulations | Typically renewed annually |
| Processing Time | Varies based on state regulations | Involves multiple steps and may take several weeks |
| Preference for Investors | Often required for sole-proprietor ventures and existing businesses | Preferred for organised and structured entities like companies |
Conclusion
Understanding the eligibility criteria for applying for a trade license is pivotal for entrepreneurs and businesses embarking on new ventures. Whether delving into manufacturing, establishing a shop, or venturing into the food industry, securing the appropriate trade license ensures compliance with regulatory requirements. Each business type, from IT services to food chains, has unique licensing demands, emphasizing the need for careful consideration and adherence to specific regulations. Vakilsearch services offer a streamlined approach to getting your trade license across India, ensuring your venture is legally sound. Trust us to guide you through the complexities, securing the right licenses for your business, and empowering your journey to success.
Frequently Asked Questions
Who is eligible for a trade license in India?
Eligibility for a trade license in India varies by state and municipality but generally includes businesses involved in manufacturing, trading, or providing services. Usually, entities such as sole proprietorships, partnerships, companies, and individuals are eligible.
How many types of trading licenses are there?
Majorly there are 3 main types of trading licenses. Manufacturing License: Whether you're running a small, medium, or large-scale manufacturing factory, we've got you covered. Shop License: From handling dangerous and offensive trades like firewood and cracker manufacturing to everyday services like barber shops, laundry (dhobi) shops, computer shops, clinics, and medical stores – secure your shop license hassle-free. Food Establishment License: Whether you own restaurants, hotels, food stalls, canteens, or are involved in the sale of meat, vegetables, bakeries, or even managing shopping malls and movie theatres – ensure your food establishment license is in place with ease.
How do I get a trading certificate?
To obtain a trading certificate, you typically need to apply to the relevant local authority or municipal corporation. This involves submitting necessary documents, such as proof of identity, address, business ownership, and compliance with safety and health regulations.
Which business needs a trade license certificate?
Various businesses require a trade license certificate, including but not limited to shops, hotels, restaurants, industries, and commercial establishments. The specific types of businesses that need a trade license may vary depending on local laws and regulations.
Where can I get a trade license?
Trade licenses are generally issued by the local municipal corporation or the respective state government authority responsible for trade licensing. The application process and requirements may vary from one jurisdiction to another.
Is a trade license mandatory?
In most cases, obtaining a trade license is mandatory for conducting business operations legally. Failure to obtain a trade license where required can result in penalties, fines, or even closure of the business by the authorities.
Who can apply for a trade license?
Generally, any person or entity engaged in business activities as per the local regulations and municipal laws can apply for a trade license. This includes individuals, partnerships, companies, and other legal entities conducting trade or commercial activities.
How long is a trade license valid?
The validity period of a trade license typically varies by jurisdiction but is often renewed annually. It's essential to renew the license within the stipulated time frame to avoid any penalties or disruptions to business operations due to non-compliance.
