Trade License Registration In India

A trade license registration is nothing more than a legal certificate or document issued by an authorised state government entity (usually a local municipality). It gives the applicant (a person or party) permission to begin operating a business in a certain area or place. The business that obtains the license is required to abide by the authority’s established rules and regulations.

The business’s online trade license also certifies that it doesn’t use any unethical practises that might endanger residents of the specified locality or territory. At least 30 days before beginning the job the petition must be fulfilled to the authority’s authorised commissioner. During this time, the applicant or enterprise must provide the necessary paperwork.

Different Types of Trade Licenses

Three different types of trade license is issued by the municipality

Type A- This type is required for all food service establishments

Type B- Units in manufacturing and processing where machines and electricity are used, such as milling units are provided with this type.

Type C- This type is provided for High-risk activities including the manufacture of fireworks, wood and timber structures.

Advantages of a Trade License Online Apply

Legal Entity: A business must possess a trade license in order to be regarded as a legal entity

Manges Rules and Regulations: As asserted by the metropolitan body the business initiated should follow all the regulations and laws described by the authorities

A Competence Measure: Having a legal online trade license permits a company to function effectively within a commercial space and will not be forced to close by external entities. This saves the company and the entrepreneur’s dignity and competence.

Who is Not Eligible for Trade License?

There are specific groups of people who are not eligible to apply for trade license.

• Minors: A person aged below the age of 18.
• Criminal History: An individual with a criminal history is ineligible for a trade license online apply.

Trade License Registration Process

It may vary depending on the jurisdiction and the local government’s policies and regulations.The method generally includes the following steps:

• Completing the application and supplying the required documentation
• Paying the required fees and obtaining a receipt
• A physical inspection of the business location by the concerned authorities
• Approval of the application and issuing the trade license

List of Documents For Online Trade License Certificate

The following papers are required for verification:

• Completed Form-353
• A letter of approval from the proprietor or a neighbor of commercial real estate
• The retail property’s city census map
• Tax statements
• If the company deals with explosives and toxic materials then a building plan is must
• At the period of registration, the Municipal Ward Officer may also request other documentation to be provided.

Documents Required For Trade License Registration

January 1 till March 1 is the time period provided for trade license renewal online in India. A person should submit the following paperwork when seeking for verification:

• The initial business permit
• All tax receipts that reflect the payments are current
• Corresponding challans and all the details regarding outstanding amount

Documents Required for Private Limited Companies

• Memorandum of Association (MoA)
• Article of Association (AoA)
• Certification of trade license
• Income tax returns
• NOC from fire department
• Receipts for rent deposit
• Rent agreement
• Lease deed
• Property tax bills
• Trade license
• RBI permission
• IRDA permission
• Pollution NOC
• Food NOC
• Drug NOC

Documents Required For Proprietorship Companies

• Rent receipt
• Previous trade license
• Rental agreement
• Proprietorship document
• Company incorporation certificate
• Trust agreement document
• Income tax returns
• Property tax documents

Documents Required for Partnership Companies

• Partnership deed online
• Income tax return
• Property tax receipt
• Rental agreement
• Previous trade license
• Lease deed

Why Is It Necessary to Obtain an Online Trade License in India?

• In India, providing a trade license is done to monitor the market and all the functioning firms
• The state government can monitor and control corporate activity using this license
• The same is carried out to guarantee that none of the commercial activities will endanger or injure any of the local resident
• It makes it simpler for the government to regulate all corporate action
• Additionally, this license provides assurance that all laws and regulations are observed to both the public and the authorities.

Points to Be Considered for Obtaining Trade License

• A trade license can be granted only by the local municipal government where the business functions
• It can only be applied to the tasks for which it was specifically granted
• Different states have different requirements, regulations, standards, deadlines, processes, and pricing structures for a trade license
• A company with a trade license registration will have a comparative advantage over one without one in terms of goodwill, brand recognition, and competitive advantage
• The presence of such a licence indicates that the business is engaged in legal business activity.

Businesses Requiring Trade License Registration

Here are some common types of businesses that typically require in India:

1. Shops and Establishments: Almost all businesses that involve trading or commercial activities, such as retail stores, restaurants, hotels, theaters, amusement parks, and other similar establishments, usually need a trade license from the local municipal corporation.

2. Food Establishments: Businesses dealing with the preparation, sale, or distribution of food and beverages, including restaurants, cafes, food stalls, food processing units, and catering services, often require a trade license along with a Food Safety and Standards Authority of India (FSSAI) license.

3. Manufacturing Units: Industries involved in manufacturing and production, such as factories, workshops, and industrial plants, are typically required to obtain a trade license to ensure adherence to safety and environmental regulations.

4. Healthcare Facilities: Hospitals, clinics, nursing homes, diagnostic centers, and other medical establishments need a trade license to ensure that they meet the necessary standards and regulations for providing healthcare services.

5. Entertainment and Leisure Activities: Businesses related to entertainment and leisure, such as cinema halls, multiplexes, video game parlors, gyms, spas, and health clubs, often require a trade license to ensure public safety and compliance with local regulations.

6. Transport Services: Businesses offering transportation services like auto rickshaws, taxis, cab aggregators, and goods carriers may need a trade license to operate legally.

7. Construction and Real Estate: Real estate developers, construction companies, and contractors might require a trade license to carry out their activities within specific municipal limits.

8. Fireworks and Explosives: Businesses involved in the manufacturing, storage, sale, or use of fireworks and explosive materials are subject to strict regulations and typically require a trade license.

9. Liquor Establishments: Businesses dealing with the sale and distribution of alcoholic beverages, such as liquor shops, bars, and pubs, require a trade license along with necessary permits from relevant authorities.

10. Street Vendors and Hawkers: Individuals or groups engaged in street vending or hawking activities may need a trade license or a specific vendor licence from local authorities.

Eligibility for Applying Online Trade License

It may vary depending on the local government policies and regulations. However, in general, businesses must meet the following requirements to apply for a trade license:

• The company needs to be set up as a legal entity
• The business location must conform to the zoning and building regulations of the concerned authorities
• The business must have valid tax registration, PAN, and GST registration
• The business must comply with all environmental and health regulations.

With the increasing trend of digitalisation, most governments now allow businesses to apply for a trade license online. The company could be required to upload scanned copies of pertinent papers as part of the online application procedure.

Benefits of Trade License in India

It provides several benefits to a business, including:

• Legitimacy: It is a legal document that proves the legitimacy of the business and ensures that it is following all the local laws and regulations
• Credibility: It gives the company more credibility and makes it simpler for it to get loans, grants, or other forms of financial aid
• Compliance: It ensures that the business complies with all health and safety regulations, which are essential to protect the public from potential hazards
• Avoid Penalties: Without a trade license, a business may face penalties, fines, or even closure.

Objective of Trade License in India

The primary objective of a trade license is to regulate and monitor commercial activities in a specific jurisdiction. The licence ensures that businesses comply with all the rules and regulations set by the local government, including environmental and health regulations, zoning regulations, and building regulations. It also ensures that businesses pay the required taxes, fees and follow ethical business practices.

Important Aspects Related to Trade License

Some of the essential aspects related to trade license include:

• Revocation: In cases of non-compliance or violation of rules, the concerned authorities may revoke the trade license, which may lead to fines or even closure of the business
• Display: Once obtained, the trade license must be displayed at the business location, as it serves as proof of the business’s legality
• Penalties: Failure to obtain or renew a trade license may lead to penalties or fines, which can be hefty and negatively impact the business’s reputation.

How to Register in Urban Areas?

Here is a general overview of the steps you might need to follow to register a business in urban areas:

1. Choose a Business Structure: Decide on the legal structure of your business, such as a sole proprietorship, partnership, limited liability partnership (LLP), private limited company, etc. The choice of structure will influence the registration process and legal requirements.

2. Choose a Business Name: Select a unique and suitable name for your business. Ensure that the chosen name is not already registered by another entity and complies with any naming guidelines set by the relevant authorities.

3. Obtain a PAN (Permanent Account Number): Apply for a PAN with the Income Tax Department if your business entity requires one. PAN is essential for various tax-related purposes.

4. Open a Bank Account: Open a bank account in the name of your business entity. Most businesses require a separate bank account for financial transactions.

5. Register for GST (Goods and Services Tax): If your business is involved in the sale of goods or services and meets the GST turnover threshold, you need to register for GST with the Goods and Services Tax Network (GSTN).

6. Obtain Trade License: Apply for a trade license from the local municipal corporation or urban local body. This license is required for most businesses and commercial activities. The application process and documentation may vary by location.

7. Registration with Shops and Establishments: Register your business under the relevant state’s Shops and Establishments Act. This registration is typically done with the local labor department and covers aspects like working hours, conditions of work, and employment regulations.

8. Professional Tax Registration: Depending on the state, you might need to register for professional tax if your business employs staff.

9. Environmental Clearances (if applicable): Certain businesses, especially those involving manufacturing or industrial activities, might require environmental clearances from the State Pollution Control Board.

10. Fire Department NOC (No Objection Certificate) (if applicable): Businesses dealing with fire hazards, such as restaurants or entertainment venues, may need an NOC from the local fire department.

11. Health Department Clearances (if applicable): Health-related businesses, like clinics or food establishments, may require clearances from the local health department.

12. Building and Construction Permits (if applicable): For businesses involving construction or modifications to existing structures, obtain necessary permits from the local municipal authority.

13. Liquor License (if applicable): If your business involves the sale of alcoholic beverages, you’ll need to apply for a liquor license from the relevant authorities.

14. FSSAI License (for Food Businesses): If your business deals with food manufacturing, processing, or distribution, obtain a license from the Food Safety and Standards Authority of India (FSSAI).

15. Other Permits and Licenses: Depending on the nature of your business, you might need additional licenses, permits, or clearances from specific regulatory bodies.

16. Compliance and Renewals: Ensure that you comply with all ongoing regulatory requirements and renew licenses and registrations as needed.