Trade License

What is a Trade License?

For operating a business within a state, municipality and corporation trade license from the concerned state government, corporation or municipality is required. Rules and regulations regarding the trade license vary from state to state. Hence, to obtain a trade license applicants first have to understand the jurisdictions under which he is operating a business.

Trade license is a license that is issued by the municipal corporation which allows individuals or companies to carry out a particular business on a particular address or to carry out operations in the territory that comes under the Indian National Government. It is a certificate that allows the holder to conduct business in the specified field and on the premises on which the jurisdiction of the Indian Government extends.

One of the main reasons you need a trade license is that it assures that the activities carried out by your company are not going to present any type of health hazard. In most states, the application will be made to the commissioner in the corporation for the allocation and renewal of the license. The application will be made within 30 days of starting to operate a business. The fee for the trade license is determined by the state in which you are applying it.

There is a multiple amounts of trade licenses present and issued nowadays. This will help you to get your business registered as well as give authenticity to it. Trade license will be issued within 7-15 days of submission of the application. One of the most important things you can do to make your business successful is to build its reputation and brand name in the market which can be done by getting a trade license.

Today, customers get to know a product through its brand name not through the name of the company hence; the company must focus on getting a trade license as it helps them to build a brand name for their products. It is basically a registration of businesses, it does not involve hard rules and regulations to comply with. It was introduced to get the businesses registered so that the government has the proper database of all the businesses which are running.

Documents required for Trade License

1. PAN card of company/partnership/ proprietor/ LLP

2. Canceled cheque and Bank statement

3. Certificate of Incorporation, MOA, AOA of company/LLP/Partnership agreement

4. Proof of premises (Electricity bill, water bill, NOC from the owner)

5. ID proof. ID proof, passport size photo of all partners/directors

6. Nature of business in which the company deals

7. Commodity details

Benefits of obtaining a trade license

1. Legal protection

It gives legal protection to the business. Without a trade license, business is considered as illegal which may lead to the penal consequences based on the nature and duration of the company. This certificate is issued to ensure that any person is not carrying out any business activity that is unethical and follows the rules and regulations set up by the local municipal corporation.

2. Implies Competence

With the increase in the development of a commercial area in India, Trade license was introduced in order to make sure that no commercial activities run in a residential area and is not a health hazard. Once a business is granted with the permission to perform its operations in an area, No authority has the right to shut down their business without any legal notice. This induces competence within entrepreneurs

Resolve your queries

1. What is a trade license?

A trade license is a certificate that grants permission to the applicant to begin a particular business or trade in a particular area. Furthermore, it does not confer ownership of property or does not grant any permission for any other activity other than which it is issued.

2. What is the purpose of a trade license?

A trade license is a license that certifies that the manner and locality in which the business is carried out is according to the relevant rules, standards and safety guidelines. A trade license will allow an applicant to operate his business in a particular area.

3. Who will issue a Trade license?

Trade license is issued by the licensing department of Municipal Corporation in various departments like health, industries, engineering, etc. It confers the permission by the way of letters or documents/certificate to carry on any business in the area where it is located. The issuance of the certificate varies from state to state depending on the rules and regulations of local government agencies.

4. What is the eligibility for a trade license?

Applicant must have the crossed the age of 18 years

Applicant must not have any criminal account

Businesses must be carried out in a legally permissible manner.

5. What are the documents required for a Trade license?

  • PAN card of company/ proprietorship/ LLP

  • MOA, AOA & COI of a company is required

  • Canceled cheque

  • Aadhar card f partners/ directors/ proprietor

  • Premises proof (Electricity bill, rent agreement, NOC from the landlord, etc)

  • Nature of business in which the company deals

  • Board of resolution

  • Commodity details

6. How many days does it take to get a Trade license?

It generally takes up to 7 to 10 working days to process the application of trade license in metro cities whereas, in other small cities and rural areas it takes even longer.

7. Is the trade license required in Delhi?

Municipal Corporation of Delhi (MCD) issues the trade license to the traders for permitted trade activities under section 2 (59) of the DMC act, 1957. It is compulsory for all traders to obtain trade licenses under section 147 of the DMC act, 1957 in the jurisdiction of MCD (Municipal Corporation of Delhi).

8. Do individual freelancers need a Trade license?

As per the rules of Municipal Corporation, every person or business engaged in any kind of trade or business is required to obtain a trade license. However, it is not mandatory for an individual to get started without a trade license but it is good to have one.

9. What is the validity of the Trade license?

The validity of trade license is for the period of one year by the municipal authority and it is required to be renewed every year.

10. What is the BBMP trade license?

In Bengaluru, BBMP issues the trade license to the shops and the industries having the place to carry out their business within its jurisdiction. This is premises specific and needs to be obtained from all locations from where the business activities are carried out.

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