Do You need a Trade License after GST Registration?

Getting a Trade License after GST Registration is necessary since these licenses prove the legitimacy of your business within the national and local limits. State, national, or local authorities are the one that provides you with these licenses to run the business as a legal entity in the respective territorial jurisdiction. The legal standards of the place have to be met to be able to do any kind of business or set up a company. Without compliance with the rules and regulations, one cannot reap the rewards of the policies set by the government to promote business growth. Additionally, there can even be fines if there is any non-compliance with the existing laws of the land which will ultimately hamper the growth of the business.

Need for a Trade License and GST Registration

There is a great need for a trade license and GST registration while conducting business activities in the country. Let’s find out why are they needed for business activity –

A trade License is required to meet the rules and regulations relating to the business activity in that particular area. The license is issued by the municipal or local authorities after checking the mandatory documentation. The main purpose of this license is to check that the operating business is running in accordance with the rules and regulations set by the authority from time to time.

A GST registration is done within the national limits and it is required for the business or companies engaged in the activities of trade of goods or service providing. GST registration is mandatory for businesses that exceed the prescribed threshold limit of sales in a span of one year. Getting the registration gives businesses the right to collect the GST on the goods or services that they have to pay to the government.

GST registration is to fulfil the tax liabilities of the business, whereas the need for a trade license is to comply with the laws, rules, and regulations of the land set by the local authorities. So, a trade license after GST registration is necessary to comply with the legal liabilities of the business to avoid fines and illegality of the business.

Reason for getting Trade License after GST Registration

The main reasons for getting a trade license after GST registrationare listed below –

Legal Compliance

The foremost requirement of the trade license is to comply with the local laws where the business is situated or carried out. The Local or municipal authorities make it mandatory to follow the rules and regulations that they set up to maintain law and order and for the business to run legally, they have to comply with the laws and get the mandatory licenses, for this getting a trade license after GST registration is required.

Fine

If the business is carried out within the limits of any local authority without the trade license or any other required license or certification, then it can impose fines on such entities. The law-infringing authorities can even be banned from operating the business within their jurisdiction. 

Geographical Requirement

Some business requires different licenses depending on their geographical location in the country. The rules and locations of different locations may also differ as per their location and other relevant factors. When the business takes place in different locations outside the jurisdiction of one place then the business requirements state that the owner has to take the trade license of the other locations as well. For example, setting up a manufacturing unit in Punjab and Jammu Kashmir may require other licenses as well. GST depends on the national authority hence it remains the same as in other places. So, trade license after GST registration is required

Market Acceptance

If the business is operating without necessary licenses and certifications such as a trade license, BIS CRS certificate (if required), etc then it may lose the trust of potential customers, dealers, investors, and others. This will have a huge impact on the business activities. Compliance with the rules and regulations states that the business is operating legally and there is no chance of any fraud which can take place. A good image in the target market is required by the businesses to grow further, due to which businesses must get a trade license after GST registration.

Government Benefits

If the business doesn’t have any trade license or is not even registered then it doesn’t have any identity in the eyes of the government. So even if the government comes up with new beneficial policies, incentives, or subsidies, these businesses would not be able to gain profit from it as the scheme will not be applied to them.

Conclusion

Getting a Trade License after GST registration is necessary to comply with local as well as national laws, rules, and regulations. Keeping track of the required licenses makes the face of the business/company more legitimate than is required to multi-fold the sales within a period. Certain geographical requirements are there that have to be met to get the perks of various governmental policies, subsidies, etc that come up over time from the Central or even state government. GST registration and Trade License are different and equally important compliances that the entity has to comply with to meet the necessary business requirements.

Corpbiz can help individuals get a Trade License as well as GST registration to help their entity better establish itself in the market. We have a pool of experienced experts who will be able to help you out in the best possible way to get the required documentation for any license that is required to be set up within the country’s territory.

Frequently Asked Questions

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