Trade License Requirment in INDIA
Trade license is the way to regulate specific business from a particular locality. It is regulated to ensure that the citizen is not adversely affected by Health Hazard & Nuisance by the improper carrying of a trade. The trade license is a means to ensure that the manner and locality in which the business is being carried on is according to the relevant rules, standards and safety guidelines. The provision of trade license is laid down by the State government to monitor and regulate the trade within a city. It is issued by the municipal corporation of the place where business is located. A trade license is a permission to carry on a specific trade or business at the premises for which it has been issued. Any unauthorised running of trade is an offence which may result in a substantial penalty and subsequent prosecution. The business owners must apply for trade license if required in particular area without any delay. An application must be made before the commencement of the activity. However, some state governments allow 15-3 months time to seek a trade license. Licence once issued requires periodical renewal on annual basis. Application for renewal must be filed at least 30 days before expiry of licence. The process of Trade license registration is often a time consuming and expensive process.
Key Points of Trade License
Why Trade License
To safeguard the public at large against the health hazard and nuisance which a trader / business may cause. Trade license is a method to regulate the trade and to ensure compliance with rule and safety guidelines issued by government.
Licensing Authority for Trade License
Trade License(s) are issued by the authorised department of a municipal corporation in consultation with other specialised departments like fire brigade, health, engineering department having jurisdiction over the business.
Trade License can be availed only if the business is run in the Permitted area. I.e. a Commercial, Local commercial, Notified Commercial, Mixed Land Use or Residential area with small shops of maximum 20 sq.m. on ground floor only.
Who Need Trade License?
Every trader engaged in a general trading activity within the territorial limits of any municipal corporation is required to obtain a trade license. The class of trade license differs from state to state and is based on the nature of the business.
Objective of Trade License
The objective of Trade License is control business locations by way of putting constraints on people from running certain types of businesses from their home to maintains the separate business environment and preserves locality environment.
State Wise Application of TL
While some state has made it mandatory to obtain a trade license, but in some states it is optional. The kind of license and license fee also differs from state to state. Some states charge a monthly fee while others charge a % of the turnover
Documents Required for Trade License
- Pan Card of the establishment in case of company, LLP or Firm.
- Canceled Cheque and bank statement of the establishment
- Certificate of Incorporation, MOA and AOA of the company or LLP/ Partnership Agreement as the case may be
- Premises Proof of the establishment in the form of Sale Deed, Electricity Bill/water bill and NOC from owner.
- Colour Photograph, Pan card and ID Proof and Address Proof of all Directors/ Partners
- Front-Facia Photograph of the establishment with Display of goods traded from the premises
- Site/Key Plan Showing the area under the occupation of the applicant earmarking the neighbourhood of the site.
- Leave Encashment
- Staff Insurance Scheme & Policies
- Professional Tax
- Labour Welfare Fund
- Company Formation
- Trade Licenses
- Shop & Establishment Registration
- GST (Goods and Service Tax)
- IEC (International Electroelectrical Commission)
- PF (Provident Fund)
- ESI (Employees State Insurance)
- Tax Planning