Trade License Online - Types, Eligibility, How To Renew and Certificate Download

There are many documents compliances to be fulfilled when you plan to start a business. A trade license is one such essential document required for running a business or trade. It permits an individual or entity to carry on business or trade in a particular municipal limit.

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. The Municipal Corporation of the state issues the trade license to the applicants. 

A trade license ensures that the business or trade is carried on by adhering to all the standards of safety as issued by the State Municipal Corporation. It protects the residents from being affected by any health hazards. All businesses covered under the State Municipal Corporation Act of the state in which they are located must apply for a trade license.

However, the license does not allow the holder to carry out any other trade or business than for which 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 India, a trade license was introduced 40 years ago. The Municipal Corporation Acts of the respective state governments regulate trade licenses. It helps to ensure that no one is severely affected by the nuisance and health hazards of any trade or business.

The state governments mandate a trade license 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. It allows the government to regulate various trade activities in the country. This license creates harmony in society by ensuring that every business is following the relevant rules, guidelines and the required safety measures.

What are the Main Objectives of a Trade License?

The following are the main objectives of a trade license: 

• To regulate and monitor the activities of businesses within a particular area, locality or municipality.
• To ensure that anti-competitive practices are not followed by businesses within a particular locality or municipality.
• To ensure that a business is following the corporation or government compliance.
• To check if a business is breaching laws or causing nuisance in society.
• To regulate the use of hazardous and other chemical substances used in a business and ensure it does not affect the people or environment.
• To ensure businesses use environment-friendly substances and protect the environment.
• To ensure businesses take necessary precautions while carrying out business activities.

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. It grants permission by way of a document/certificate to carry on any business or trade in the place where it is located. The issuance of the license varies from state to state depending on the local government agencies’ (Municipal Corporation) rules and regulations.

For example, if an applicant wants to open a food stall in Bangalore, then the applicant will have to apply to the Bruhat Bangalore Mahanagara Palike (BBMP) for a trade license since BBMP is the Municipal Corporation body in Bangalore. 

Different Categories of Trade License

• Industries license: Small, medium and large scale manufacturing factories.
• Shop license: Dangerous and offensive trades (sale of firewood, cracker manufacturer, candle manufacturer), barber shop, laundry (dhobi) shop, computer shops, clinics, medical stores, etc.
• Food establishment license: Restaurants, hotels, food stall, canteen, the sale of meat and vegetables, bakeries, shopping malls, movie theatres, etc

Eligibility to Apply for a 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.

How to Apply for a Trade License?

An applicant can apply for a trade license either online or offline. The application for a trade license must be applied with the city municipal corporation, which covers the area where the business is located. In some states, it must be applied before a month of starting the business, while in other states, it can be applied within 30 days of commencement of business. It varies as per the respective State Municipal Corporation Act. 

Online process to apply for a trade license:

Step 1: Visit the respective city municipal corporation website. 

Step 2: Click on the ‘Citizen online services’ option and select the ‘Trade License’ option.

Step 3: Click on the ‘Apply for Trade License’ option. 

Step 4: Fill out the registration form.

Step 5: Upload the required documents and submit the form.

Step 6: The respective authorities will verify the application and documents.

Step 7: After verification, a unique application number/ID is generated.

Step 8: Visit the municipal corporation website and pay the fee.

Step 9: The trade license number will be issued.

Offline process to apply for a trade license:

Step 1: Visit the respective city municipal corporation office of the area in which the business is located.

Step 2: Obtain the trade license application form.

Step 3: Fill in all the necessary details in the form.

Step 4: Submit the application to the municipal corporation officials along with the required documents. 

Step 5: The officials will verify the application and issue a unique application number/ID.

Step 6: Visit the municipal corporation office and pay the fees.

Step 7: The trade license will be issued. 

Documents Required to Apply for a Trade License

• Address proof of the business
• ID proof of the applicant
• Aadhaar card
• PAN of the individual in case of proprietorship, PAN of the partners in case of a firm or PAN of the company or Limited Liability Partnership (LLP)
• Memorandum of Association (MOA), Articles of Association (AOA) and Certificate of Incorporation in case of companies
• Certificate of registration in case of a partnership firm and LLP 
• A latest municipal property tax receipt in case the premises are owned, else lease document or consent letter of the owner of the property (NOC) where the business is registered.
• NOC from the pollution control board and fire department, if applicable
• NOC of the neighbours (nearby property owners)
• Katha certificate
• Certified layout plan of the office

Trade License Fees

The trade license fees vary from state to state since it is issued by the government agencies (Municipal Corporations) 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.

Trade License Processing Time

Trade license will be issued within 7-15 days in metropolitan cities after paying the fees. In rural and small cities, it may take more time, up to 30 days, to issue the trade licesne after payment of fees.

Trade License Status

Applicants can view the status of the trade license application on the city municipal corporation website. However, the process varies on different municipal corporation websites. Below is the general process to view trade license application status:

• Visit the respective city municipal corporation website.
• Click on the ‘Citizen online services’ option.
• Click the ‘Application Status’ option. 
• Enter the application number and click on ‘Get Status’.
• The status will be displayed on the screen.

Trade License Certificate Download

The trade license certificate can be downloaded from the city municipal corporation website. However, this process may vary on different municipal corporation websites. Below is the general process to download the trade license certificate:

• Visit the respective city municipal corporation website.
• Click on the ‘Citizen online services’ option.
• Click on the ‘Download Certificate’ option. 
• Enter the ‘Application Number’.
• Click on the ‘Download’ button. 

Trade License Renewal Online

The trade licenses issued by the Municipal Corporation are valid for a year and must be renewed annually. The trade license renewal application must be filed within 30 days before the expiry of the license. Generally, trade licenses in India are renewed from 1 January to 31 March every year. The online trade license renewal process is as follows:

Step 1: Visit the city municipal corporation website.

Step 2: Click on the ‘Citizen Services’ button.

Step 3: Click on the ‘Trade License’ option and click on ‘Renewal of Trade License’.

Step 4: Enter the license number details. The business details will appear on the screen. 

Step 5: Check the details and click on the ‘Confirm’ button.

Step 6: Upload the required documents and click on the ‘Continue’ button.

Step 7: Pay the fees and click on the ‘Apply’ button. 

Please note that this process may differ from one municipal corporation website to another.

Following are the documents required to renew the trade license: 

• Original copy of the trade license.
• Previous year challans.
• Up-to-date property tax paid receipt.

Frequently Asked Questions

Which business needs a trade license certificate?

All trading and manufacturing businesses require a trade license. Generally, all small, medium and large manufacturing industries/factories, shops, food businesses, health care shops,  hazardous businesses, marriage halls, retail shops, etc., must obtain a trade license.

Where can I get a trade license?

A trade license can be obtained from the Municipal Corporation of the area where the business is located. It can be obtained online from the State Municipal Corporation website or offline by visiting the Municipal Corporation office.

Is a trade license mandatory?

Yes. When your business is covered under the State Municipal Corporation Act of that particular state where your business is located, you must mandatorily apply for a trade license.

Who can apply for a trade license?

The owner of the business, a company or LLP can apply for a trade license. 

How long is a trade license valid?

The trade license is valid for one year.

What happens if I fail to renew my trade license?

When you fail to renew your trade licesne within 31 March or the last date, then you will have to pay the penalty and apply for its renewal. Your business might be closed by the authorities if you operate it without having a renewed trade license.

Can I apply for a trade license if I am running my business from home?

Yes, you must obtain a trade license when you are running a business from home.