Government Registration

Do You need a Trade License after GST Registration?

calendar28 Feb, 2024
timeReading Time: 4 Minutes
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

  1. When should a person take the Trade License?

    One can start the business and within thirty days of the setting up of the busines she/ she should take the Trade License.

  2. Who issues the GST registration Certificate and Trade License?

    Trade License is issued by the local or municipal authority of the area where the business activities will take place. If there are multiple places for business activities then every authority’s license would be required. The GST registration certificate is issued by the Central Board of Indirect Taxes and Customs. GST certificate is valid in the whole country as it is issued by the central body.

  3. What is the threshold limit of GST registration?

    The threshold limit for GST registration is different for Goods and Services. If the business is into providing services, then its threshold limit is Rs Twenty Lakhs and if it is into goods then the threshold limit is Rs Forty Lakhs. If the turnover of the business is above this limit, then GST registration is mandatory.

  4. Is it mandatory to get a Trade License in India?

    No, it is not mandatory in India to get the Trade License for business but, to make the business legal in India they need to have the Trade License and other relevant Licenses and certifications as applicable in the business environment.

  5. How many types of Trade Licenses are there?

    There are 3 types of Trade Licenses in India, that are –
    ·         Shop License
    ·         Industries License
    ·         Food License

  6. How much time does it take to get the Trade License in India?

    To get the Trade License in India firstly you need to apply with proper documentation with the local authorities having the jurisdiction over the place of business. After the application is submitted, it takes around 10-15 days to get the License for Trade.

  7. What are the basic requirements to apply for a Trade License application?

    To get a Trade License in India the applicant needs to comply with these basic requirements –
    ·         Must have attained 18 years of age
    ·         No past criminal records
    ·         Business must be legal
    ·         Business must not have illegal objective

  8. What is the scope of the Trade License and GST registration certificate?

    The scope of the Trade License and GST registration certificate is that the Trade License is limited to the local jurisdiction of the authorities while the GST certification is valid throughout the country’s territory. 

  9. For how many years a trade license is issued?

    A Trade License is issued for a period of 1 year and after that you have to renew it from the authorities by paying the license fee.

  10. What is a Trade License?

    A Trade license is a certificate of authorization from the local/ municipal authority to conduct the business proceedings in its jurisdiction in a legal manner.

Read Our Article: MCD Health Trade License: Process And Documentation

Request a Call Back

Are you human? : 1 + 5 =

Easy Payment Options Available No Spam. No Sharing. 100% Confidentiality