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Trade License
A trade license is a document/ certificate that allows the applicant to commence a particular trade or business in a particular area/location. It certifies you to carry out a particular business for which it is issued. It does not give ownership of property or permission for any other activity other than for which it is issued.
A trade license is issued to ensure that the business or trade is not carrying wrong practices in terms of standards of safety and to stop unfair trade practices which are illegal in the eyes of law as issued by the State Municipal Corporation.
Every business entity has to take a trade license from the state municipality before beginning manufacturing, exchange or storage of any activity. The application has to be filed 30 days before the start of business and It is valid for 5 years and It is required to renew every year from 1st January to 31st March.
Eligibility Criteria for a Trade License
- Applicant must have attained the age of 18 years
- Applicant must not have any criminal records
- Businesses must be lawfully permissible in the eye of law
The Trade License is issued by the licensing department of the municipal corporation in different departments like industries, engineering, health, etc.
The government of India allows the license in a way to regulate in cities over the country. It permits by the way of letters or documents and certifies to carry on any business or trade wherever it is located. The issuance of the license differs from state to state depending on the local government agencies i.e. Municipal rules and regulations.
Types of Trade License
There are 3 types of trade licenses that a company or individual can apply for based on the type of trade or business they take forward.
Shop License
This license is required for anyone who wants to open a shop. The shop can be of any retail type or any service provider.
Industrial License
This type of license is required for any company that wants to open a small or mid-sized industrial unit.
Food Establishment License
Any establishment that plans on getting into the food and beverage industry requires this license. The license applies to restaurants, cafes, meat shops, bakeries and vegetable shops.
What is the need for a Trade License
Trade license is applicable in India for the last 40 years and It is Governed by the Municipal Corporations of the respective States. The main motive behind the Applicability of this license is to ensure that no one is individually affected by the obstacle and health hazard from any trade or business.
The following Points enlighten that why a trade license is necessary :
- Trade License has been made mandatory 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 wrong business practices.
- This license creates a harmony in the society that all business is following relevant rules, guidelines and adopting the safety measures.
- This license was made necessary to make sure that the government can regulate different trade activities in the country.
- The core purpose of issuing this is to control the locations by restricting the people from executing some types of businesses from their home location to maintain the business environment.
- Important to regulate the trade to ensure that the citizens are not adversely affected by health hazards & nuisance due to improper carrying of a trade.
- A medium to ensure that the business is being carried by the relevant rules & safety guidelines.
- A Licensed business will have higher goodwill and will attract customers and investors than an unregistered entity.
- It protects the owners upon some types of liability.
- Companies having better business practices attract different investment groups and other business organizations
- To do ethical business, the person can apply for getting Trade License Registration which assures the safety measures and guidelines.
- If a person does not get a Trade license as needed under the law and begins any business then a government can impose fines and penalties on such a person. It can also result in the closing of such a business.
Documents Required for Trade License
- Identity card of the applicant;
- Address proof;
- PAN card of the establishment (For Companies, LLP, and Firm);
- Memorandum of Association (MOA) of the company;
- Articles of Association (AOA) of the company;
- Affidavit;
- Latest bank statement along with a cancelled cheque;
- Property Tax Receipt;
- Income Tax Return (ITR) statement;
- Proof of the establishment of the trade;
- Lease documents or consent letter from the Landlord;
- Utility Bills such as Electricity Bill/Water Bill, etc.;
- No-Objection Certificate (NOC) from the premise owner;
- Other documents, if required
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