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Shailza Sharma
| Updated: 20 Jan, 2020 | Category: Government Registration, Trade

Planning Business set up in Local Municipal Area; Trade License Should be the First Requirement

Online Trade License

Businesses that carry out trade in the municipal area, necessarily required to have a trade license. It is a legal document issued by Municipal Corporation, granting permission to carry on a particular business. Read out the blog, to get information related to Trade License, why is it necessary? What are the essential points that need to be kept in mind while applying for the license?

What is a Trade License?                                               

A trade license is a legal document or certificate issued by Municipal Corporation. This license provides permission to the applicant to start a specific business in a particular locality. It does not provide any ownership of the property or authority to carry any other activity other than the business specified in the license. 

Why Trade License?

It is regulated to ensure that the applicant is not adversely affecting health hazard and nuisance by carrying any improper trade. Mainly, the motive behind license is to safeguard the public at large against the health hazards and nuisance which a trader/business may cause. Trade License is important to regulate the trade and to ensure compliance with rule and safety guidelines issued by the government.

  • To ensure that the public at large is not affected by health hazards & nuisance due to carrying of improper trade.
  • It’s a kind of a medium which ensure that the business is being carried in virtue of relevant rules & safety guidelines.
  • Trade License business will work under higher goodwill and will attract the customers.
  • It protects the applicant upon various types of liability.
  • To do ethical business, Trade License Registration is the way which assures that safety measures and guidelines are followed by the applicant while carrying business.
  • If an applicant’s business requires a trade license and applicant fails to acquire the same than a government can impose fine and penalty. It can also result in the closing of such business.

Who is the Licensing Authority?

Municipal Corporation has the authority to issue the license. Municipal Corporation[1] with the various licensing department of other specialized departments like health, Industries, engineering department and Fire brigade department, issue License. Permission of carrying business is granted by the government by way of two letters or certificate/ document where the business is located.

Who needs to obtain Trade License?

Every trader who is engaged in the business of general trading activity within the jurisdiction limit of any municipal corporation is required to obtain a trade license. Nature of business defines the class of trade licenses and differs from state to state.

What are the different categories of Trade License?

Different kinds of Licenses are as;

  • Shop License – Dangerous and Offensive trade like a sale of firewood, candle manufacturing cracker manufacturing, and Dhobi Shop, barbershop etc.
  • Industrial License – Small, medium and large scale industries
  • Food Establishment License – Restaurants, hotels, food stalls, canteens, sale of meat and vegetables, bakeries etc.

What is the eligibility for a Trade License?

  • The applicant must have attained the age of 18;
  • He must not have any criminal record against him;
  • His business should be lawfully permissible.

Read our article:A Complete Overview of Shop and Establishment Act And How to Obtain its License?

What are the documents required for Trade License?

  •  Application in the prescribed Form 353 duly filled;
  •  In case where applicant is any Firm, LLP or a Company, then  PAN Card, along with the incorporation certificate is required;
  • An individual applicant needs to submit his/her Aadhaar Card;
  • Recent Municipality Property Tax Payment Receipt;
  • Lease documents or consent letter from the owner of the property (in a case where property is rented);
  • No Objection certificate  from your immediate neighbour;
  • A certified layout plan of your trade building
  • A blueprint of a building, if the applicant is carrying business of explosives, dangerous goods,  and timber;
  •  For Katha extracts, Katha certificate is required;
  • Sanction plan
  • Occupancy certificate (OC)

What are the documents required for the renewal of Trade License?

  • Original trade License;
  • Tax receipt furnishing details of  tax payments;
  • Previous payment challans.

What is the procedure for Trade License?

Procedure for Trade License

What is the processing time of Trade license?

Usually, it takes 7- 10 days of a time period to process the application of trade license in major cities of India. However, where the applicant belongs to rural areas processing time is a bit longer.

What are the penalty provisions?

In case where business owners operate their business without a license, the following can be the risk on non –compliance.

Fine and Penalties;

If any business owner operates his business without any valid license, in that scenario person is liable to pay fine or penalty. The fine is imposed according to the rules and regulations of that particular area’s Municipal Corporation. The fine also depends upon the nature of business being carried out.

In case where a person fails to renew his license, a fine of 50% of the license fee is levied upon the person.

Closure of Business   

A person caught without a license can face the closure of business by the MC authority. Unfortunately, person delaying in applying for trade license can face such a consequence, which is the biggest loss business can face.

Chances of legal action

If a customer is not happy with the service or product offered by you without trade license, customer can file a lawsuit against you. In fact, doing business without a license is a fraudulent act in itself. Furthermore, if the plaintiff wins the lawsuit, there will be chances that owner will be responsible for paying heavy compensation to the plaintiff.

Revocation of License 

If any person violates the rule and regulation of the license or causes any nuisance to the neighborhood, there will chances authority can revoke the license on a mere complaint.   

Why should you rely on Corpbiz for your Trade Reasons?

We provide you with many reasons to chose us over many other license providers in India. We are;

  •  At present Corpbiz is the most trusted service provider, with the highest success rate in providing Government registration services;
  • Our services are most loved by startup companies;
  • We have affordable and transparent pricing;
  • We value the client’s time, so believe in delivering our services on time;
  • Our team of experts provides continues support, and we guarantee complete client satisfaction.

Conclusion

Trade license is the step taken by the Indian government to safeguard the public at large against the health hazards and nuisance which a trader/business may cause. Fines and penalties are also being imposed if the authority notices any violation in rule and regulations. Here at Corpbiz, we will help you in the filing of trade licencing and also you can contact us for the renewal of your license.

Read our article:Know the Differences Between Trade License And Shops and Establishment License

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Shailza Sharma

Miss Shailza Sharma, BA. LLB graduate from Himachal Pradesh University. She holds an experience of 2.5 years in various Legal companies and organizations.

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