Are you thinking about starting a new business and wondering what paperwork you’ll need? Then you should know that the foremost important step to start a business or trade in a specific municipal limit in India is trade license registration.
Trade License
A trade license meaning a document or certificate that authorizes the applicant to start a specific trade or business in a specific area or location. The trade license holder may not use it for any other work or business.
Why Trade License?
To begin any business in a specific area or location, a state, corporation, or municipality will requirea trade license from the concerned central or state government. To obtain registration, the applicant must first understand the jurisdiction in which the business is located as well as the applicable Act.
The trade registration application must be submitted within 30 days of beginning a business. When an application is submitted, a trade license is usually issued within 7-15 days. In most states, the application for trade license issuance or renewal will be made to the commissioner of the corporation.
Different types of trade licenses
- Industry License: Small, medium, and large-scale manufacturing plants are all licensed.
- Shop License: Dangerous and offensive trades such as firewood sales, cracker manufacturing, candle manufacturing, barber shop, dhobi shop, and so on.
- Food establishment License: Restaurants, hotels, food stalls, canteens, meat and vegetable sales, bakeries, and other food establishments require a food establishment license.
Qualification for a Trade License
- The applicant must be at least 18 years old.
- The applicant should have no criminal history.
- The nature of the business must be legal.
Who is in charge of issuing the Trade License?
The trade license is issued by the municipal corporations’ various departments such as industries, engineering, health, and so on.
The licenses are authorized by the Indian government to regulate in cities across the country. The rules and regulations of local government agencies (Municipals) govern license issuance in each state.
Documents required for the registration of a trade license
To apply for a trade license, the applicant must apply with the relevant municipal authorities and submit the following documents.
If the applicant is a firm, LLP, or company, submit an application in the prescribed form for a PAN Card along with the incorporation certificate.
- Address verification for the business ID Aadhaar card of the applicant
- In the case of a sole proprietorship, the PAN of the individual; otherwise, the PAN of the firm or company.
- In the case of corporations, the Memorandum of Association (MOA)
- Certification of incorporation is required, in case of companies
- If the premises are owned, the most recent municipal property tax receipt; otherwise, a lease document or consent letter from the owner of the property where the business is registered.
- NOC (neighboring property owners) from the neighbors
- The office layout plan has been certified.
Procedure to Register
Based on the location of the applicant, he/she must apply for the trade license certification either online or offline. To use the online method, the applicant must fill out an application and attach the required documents or for the offline method (in-person), the applicant must bring all required documents to the appropriate authority. The applicant must then complete the application form with the necessary license information.
Different states will have different processes for applying for a license based on the applicant’s needs. However, the government has launched initiatives to make all state systems electronic.
To apply for an online trade license, the applicant must go to the specified website. The online system for license registration has a mode where document authentication can be done electronically. The applicant must complete these tasks and submit the necessary documentation. After completing this process, the applicant will receive confirmation of the successful registration of the trade license. The applicant will receive confirmation, and the license will be delivered to him or her within eight to eleven working days.
When compared to rural areas, the process of obtaining a trade license is usually faster in metropolitan cities.
The fees for trade licenses vary by state because they are issued by the respective state’s government agencies or Municipals. The license fees are determined by the rules and regulations in effect in that state. Trade license fees are charged on an annual basis in some states. Other states calculate it based on the percentage of annual business turnover.
