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Everything about Trade License and its renewal

Updated on: May 31st, 2022


7 min read

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Are you planning to start a new business and thinking about all the essential documentation you will need? Trade License, one of the important documents to start a business or a trade in a particular municipal limit.

Let us explain you in brief about the trade license and its benefits.

What is a Trade License?

A trade license is a document/certificate that gives permission to the applicant (person seeking to open a business) to commence a particular trade or business in a particular area/location.

It ensured that the business or trade is carried by adhering to all the standards of safety as issued by State Municipal Corporation . 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. Furthermore, this license does not pass on any kind of property ownership to the holder of the license.

Why Trade License?

In the last forty years, trade license has been introduced in the country and is being regulated through municipal corporation acts by the state governments.

This helps in ensuring that no one is severally affected by nuisance and health hazard of any trade or business.

It has been made necessary by the government to carry out any particular business or trade in a particular area and to ensure that no one is carrying out any unethical business practices.

This license creates a harmony in the society that every business is following relevant rules, guidelines and obeying the safety measures. This license was made obligatory to make sure that the government can regulate various trade activities in the country.

The core objective of issuing a this 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.

Who can issue a Trade license?

It is issued by the licensing department of the municipal corporation in various departments like industries, engineering, health etc.

The government of India authorizes the license in a manner to regulate in cities across the country.

It grants permission by the way of letters or documents/certificates to carry on any business or trade where it is located. The issuance of the license varies from state to state depending on the local government agencies (Municipals) rule and regulations.

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Different categories of trade license

  • Industries license: small, medium and large scale manufacturing factories
  • Shop license: Dangerous and offensive 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

Eligibility for applying for Trade license

The eligibility conditions for applying trade license are as follows:

  • 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 neighbours (nearby property owners)
  • Certified layout plan of the office

You can apply online or offline for the trade license through the local municipal corporation.

Trade License Fees

The trade license fees vary from state to state since it is issued by the government agencies (Municipals) of the respective state. The license fees are determined based on the rules and regulations prevailing in that respective state. In some states, trade license fees are charged on an annual basis. Whereas, in other states, it is calculated based on the percentage of annual business turnover.

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