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Trade License Registration and Procedure

Narendra Kumar

| Updated: Feb 05, 2018 | Category: Trade License

trade license

If you wish to start your own business in the form of a shop, factory or any other establishment, you will be required to apply for Trade License with the respective authority. The authority to which the application is required to be submitted is based on the business address of the establishment.

The power to issue a trade license is delegated by the State Governments to the Municipal Authorities. This is the reason the actual procedure of application and their processing might vary a little, depending upon the rules and regulations laid down by these authorities.

Purpose

Basically, Trade License is an approval letter issued by the authorities stating that it is okay for the applicant to operate your Business Plan in a particular area. But, the main object is to make sure that the trading activity carried on in any particular area is not causing any nuisance or does affect the health or environment of that area.

Fee

These trade licenses are not free. A certain amount is required to be paid by the applicant to the concerned authorities. This fee can be either is

  • A fixed one-time fee to be paid at the time of fresh application and renewal of the license, or
  • The fee can vary depending upon the figure of the annual sale of the business.

Read our article:Trade License Registration and Procedure

Who can apply for Trade License

There are two major pre-requisites for one to be able to become the applicant of Trade License, they are:

  1. The person must have attained the age of 18 years and
  2. They must not have any criminal records in their name.

The business proposed to be carried on must be of a legal nature.

Types of Trade License

The purpose of the Trade license application may vary as there are various different types or categories of licenses. To list out a few:

  • Food establishment license

This kind of license is to be applied to the business relating to hotels, restaurants, food Safety Standard, café, canteen, bakeries, vegetables or meat shop vendors, etc.

  • Industries License

This kind of license is to be applied to small and large-scale manufacturing factories.

  • Shop License

This kind of license is to be applied by anyone wishing to open a shop; it can be a gift shop, retail Meat Shop, etc.

Features of Trade License

  1. The most important feature is that it is required to be applied beforehand, i.e. before starting the business. However, in rural areas as well as some small cities the license can be applied within 30 days from the date of commencement of business.
  2. Validity: The trade license issued by the authorities is valid for a period of one year and required to be renewed annually. The application for renewal of the same is to be submitted within 30 days from the date of the expiry of license.

Procedure for Application and Document Requirement

For making an application for a trade license, the applicant is required to submit the application to the concerned authority (Municipal Corporation) along with all the required documents. The documents required for the same are:

  1. Application in Form 353 or 354, as the case may be.
  2. If the applicant is an individual, his/her Aadhaar Card is mandatory.
  3. If the applicant is any Company, LLP, Firm, etc, their PAN Card, along with incorporation certificate or document.
  4. Latest Tax Payment Receipt.
  5. Consent letter or Lease documents from the property Owner.

Processing time

Generally, Trade license application is processed within 7-10 days in metro cities. In other smaller cities and rural areas, it takes longer.

Penalty Provisions

The concept of trade license is introduced with a view to discourage any illegal activity and ensure the maintenance of the environment. This is ensured by making sure no industrial or manufacturing-related activities are conducted in any residential area. There are various other provisions and rules and regulations are required to be followed by the registered people.

In case of non-registration of trade license and starting any activity before completing the pre-requisite of trade license, the person in violation will be liable to pay penalty and might also be liable for legal action against him.

If you wish to start your own business in the form of a shop, factory or any other establishment, you will be required to apply for Trade License with the respective authority. The authority to which the application is required to be submitted is based on the business address of the establishment.

The power to issue a trade license is delegated by the State Governments to the Municipal Authorities. This is the reason the actual procedure of application and their processing might vary a little, depending upon the rules and regulations laid down by these authorities.

Purpose

Basically, Trade License is an approval letter issued by the authorities stating that it is okay for the applicant to operate your Business Plan in a particular area. But, the main object is to make sure that the trading activity carried on in any particular area is not causing any nuisance or does affect the health or environment of that area.

Fee

These trade licenses are not free. A certain amount is required to be paid by the applicant to the concerned authorities. This fee can be either is

  • A fixed one-time fee to be paid at the time of fresh application and renewal of the license, or
  • The fee can vary depending upon the figure of the annual sale of the business.

Who can apply for Trade License

There are two major pre-requisites for one to be able to become the applicant of Trade License, they are:

  1. The person must have attained the age of 18 years and
  2. They must not have any criminal records in their name.

The business proposed to be carried on must be of a legal nature.

Types of Trade License

Purpose of the Trade license application may vary as there are various different types or categories of licenses. To list out a few:

  • Food establishment license

This kind of license is to be applied to the business relating to hotels, restaurants, food Safety Standard, café, canteen, bakeries, vegetables or meat shop vendors, etc.

  • Industries License

This kind of license is to be applied to small and large-scale manufacturing factories.

  • Shop License

This kind of license is to be applied by anyone wishing to open a shop; it can be a gift shop, retail Meat Shop, etc.

Features of Trade License

  1. The most important feature is that it is required to be applied beforehand, i.e. before starting the business. However, in rural areas as well as some small cities the license can be applied within 30 days from the date of commencement of business.
  2. Validity: The trade license issued by the authorities is valid for a period of one year and required to be renewed annually. The application for renewal of the same is to be submitted within 30 days from the date of expiry of license.

Procedure for Application and Document Requirement

For making an application for trade license, the applicant is required to submit the application to the concerned authority (Municipal Corporation) along with all the required documents. The documents required for the same are:

  1. Application in Form 353 or 354, as the case may be.
  2. If the applicant is an individual, his/her Aadhaar Card is mandatory.
  3. If the applicant is any Company, LLP, Firm, etc, their PAN Card, along with incorporation certificate or document.
  4. Latest Tax Payment Receipt.
  5. Consent letter or Lease documents from the property Owner.

Processing time

Generally, Trade license application is processed within 7-10 days in metro cities. In other smaller cities and rural areas, it takes longer.

Penalty Provisions

The concept of trade license is introduced with a view to discourage any illegal activity and ensure the maintenance of the environment. This is ensured by making sure no industrial or manufacturing related activities are conducted in any residential area. There are various other provisions and rules and regulations are required to be followed by the registered people.

In case of non-registration of trade license and starting any activity before completing the pre-requisite of trade license, the person in violation will be liable to pay penalty and might also be liable for legal action against him.

Read our article:What Is the Importance of Obtaining a Trade License?

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Narendra Kumar

Experienced Finance and Legal Professional with 12+ Years of Experience in Legal, Finance, Fintech, Blockchain, and Revenue Management.

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