What is Trade License and How It is Different from Shop Establishment License?

Narendra Kumar

19 Mar, 2021

In this article, we will discuss the Difference between Trade and Shop Establishment License.

Differences between Trade and Shop Establishment License

Shop Establishment License issued by the government which gives permission to carry on the particular trade or business. It does not confer ownership of property or permission of any other activity other than for which it is issued. An application is to be made to the Local Municipal Corporation^[1] for obtaining the trade license. It is one of an initiative to regulate trade to ensure that the citizens are not adversely affected by health hazards and nuisance. It ensures that the location at which is carried out is according to the relevant rules and regulations, standards and safety guidelines.

What is Shop Establishment License?

Shop Establishment is mandatory under the respective state act for every person who is starting any commercial activity like a shop or business. Any shop or commercial establishment must apply for Shop and Establishment registration within 30 days of commencing operations. The Application must be submitted to the local municipal corporation of the respective state for getting the license. Even a small trader or a service provider would require this license if he is doing any business or commercial activity. This Act was mainly enacted to regulate the conditions of workers and employees working in a shop or commercial establishments.

What is the Difference between Trade and Shop Establishment License?

Following is the difference in between Trade and Shop Establishment License:

• An individual who is going to commence any business or shop needs to get the business registered with the local government in Shop Establishment while trade license is a permission given to a person to carry out a particular business or trade.
• Shop and Establishment can also be obtained on residential premises while Trade license can only be obtained on commercial
• It is mandatory under the law to get a Trade license to make sure that the person is not carrying out any unethical business practices and is following the rules and safety guidelines issued by the government from time to time. Shop Establishment is mainly required for the small trader and shop owner who is doing any commercial activity.
• Trade licenses are mainly required for establishments like hotels, restaurants, canteen, food stall, manufacturing industries, cyber café, etc. while Shop Establishment is required for every shop and commercial establishment who is doing business or providing any services.
• For every legal business and service activity, one needs to have a license while shop establishment is required for the small unorganized sector. It protects the worker’s and employees’ working conditions as the act lays down the working hours, opening and closing hours, wage rate, weekly holidays, etc. It also lays down the working hours for women in employment and also for child labor
• Trade License and Shop Establishment laws vary from state to state as every state has different laws. The fees for the same also are also different in every state.
• Trade License has to be obtained within 30 days of commencement of business. If any individual violates the condition of a license or causes a nuisance in the neighborhood than the license can be revoked or canceled.
• Shop and Establishment Act governs the working conditions and rights of workers engaged in the unorganized This includes wage payments, leave and holidays, work hours, etc.

Read our article:Change to MOA of a Private Limited Company

What are the Documents Required For Trade and Shop Establishment registration?

Following documents are required for Trade and Shop License:

• In case of individual Identity Proof, Address proof and in case of company MOA and AOA and certificate of incorporation along with an affidavit of director and his Identity proof and Resident Proof.
• PAN Card of the company
• Proof of premises like electricity bill, property tax receipt, etc.
• In case the premises are rented rent agreement along with NOC of owner
• NOC from the fire department
• Blueprint of the premise