Trade License
A trade license is a document that gives permission to the applicant (person seeking to open a business) to commence a trade or business in any specific area or location. It ensured that the business or trade is carried by adhering to all the standards of safety as issued by State Municipal Corporation (SMC). It protects the residents from being affected by any health hazards. However, the license does not allow the holder to carry out any other trade or business than for it is issued.
Trade license creates a harmony in the society that shows every business is following relevant rules, guidelines and obeying the safety measures. The core objective of issuing trade license is to control the locations by restricting the people from executing certain types of businesses from their home location to maintain the business environment and locality environment.
Different Categories of trade License
Industrial License: Small, Medium or Large-Scale manufacturing factories
Shop license: Hazardous and invasive trades like a sale of firewood, cracker manufacturer, candle manufacturer, barber shop, laundry (dhobi) shop etc.
Food establishment license: Restaurants, hotels, food stall, canteen, the sale of meat & vegetables, bakeries etc.
Classification of Trade Licenses
Low Risk Based License
This form of license would involve any form of business that does not have a high risk. Usually, restaurants and other forms of eateries consider this license.
Medium Risk Based License
This type of license would be usually issued to establishments such as small scale industries and medium-sized industries.
High Risk Based License
This type of license is usually issued to industries and large scale establishments. Usually, this form of establishments would have higher risk of dealing with different form of materials and substances. Normally, on these premises, the standards of monitoring would be higher when compared to low and medium risk license.
Eligibility for applying for Trade license
- The applicant should be more than 18 years old
- The applicant should not have any criminal records
- The business should be legally permissible
Documents required for applying for Trade license
Documentation required for application of the trade license are as follows:
- Address proof of the business
- ID proof of the applicant
- Aadhaar card
- PAN of the individual in case of proprietorship, else PAN of the firm of company
- Memorandum of Association (MOA) in case of Companies
- Certification of incorporating in case of Companies
- A latest municipal property tax receipt in case the premises are owned, else lease document or consent letter of the owner of the property where the business is registered.
- NOC of the neighbors (nearby property owners)
- Certified layout plan of the office
- Procedure for applying for a Trade License
- The applicant must either apply online or offline for the trade license certification.
- As per the requirement of the applicant, different states would have different processes to make an application for the license.
- The applicant must go to the prescribed webpage to file the online trade license.
- After this, the applicant will get a pop-up notification related to the terms and conditions which must be adhered for the trade license.
- The applicant must click on the accept button for the terms and conditions.
- Next step in the process would include the applicant to fill in necessary information and details regarding the trade license.
- Once this process is carried out, the applicant will get a confirmation for successful registration of the trade license.
- The applicant will get the confirmation regarding the same, and the applicant will receive the license within eight to eleven working days.
Validity of Trade License
Trade license is necessary for every business that carries out a trade or business needs. A trade license is valid only for 1 year Many other provisions, rules, and regulations are required to be followed by the registered person. In case of negligence to comply with the registration conditions of trade license and starting any trade activity before the issuance of this license, the person in the default will be responsible to pay the directed penalty. Moreover, legal action can also be taken against the defaulter.
Trade License Renewal
The trade licenses in India are renewed from January 1st to March 31st. The validity of a license issued by the municipal authority is for one year and required to be renewed every year.
Breach or Penalties
- Once a trade license is taken by the applicant, he/ she must ensure that compliance is followed and maintained by the applicant.
- In case the applicant does not secure the trade license, then there are different consequences which can be imposed by the relevant authorities.
- If the business is started, its operations without relevant licenses, then a penalty or fee would have to be paid.
- The defaulter can also be prosecuted if non-compliance is continued.
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