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Trade License Registration

A trade license is a document or certificate that enables the applicant to start a particular trade or business in a specific area or location. It is issued by the state government. It does not assure any kind of property ownership and you cannot do any other business rather than for which it is issued. Let us read on to find out more about the importance of Trade License registration, eligibility, documentation, different categories of trade licenses, and so on.

What Is A Trade License Registration

A trade license ensures that people don’t make their residential area their business location. A business within a state, municipality, or corporation will require trade license registration from the concerned central or state government to begin with any business in a particular area or location. The applicant must first understand the jurisdiction under which the business is operating and the applicable Act.

Also Read: Trading Finance

The trade registration application must be completed within 30 days of commencement of the business. It is usually issued within 7 to 15 days of submission of the application. The application for grant or renewal of the license will be made to the commissioner of the corporation in the case of most of the states.

Who Issues The Trade License?

The trade license is issued by various departments of the municipal corporations like industries, health, engineering, etc. The issuance of the trade license varies across states based on the local government agency’s (Municipals) rules and regulations. The Government of India authorizes the licenses to regulate cities across the country.

Eligibility Criteria For A Trade License

  • The applicant must be above 18 years
  • The applicant should not have any criminal records
  • This type of business must be legally permissible

Documents Required For Trade License

The applicant must submit the following documents along with the application to the concerned municipal authorities:

  • Application in the required format
  • Aadhaar is mandatory when an individual is the applicant.
  • Most recent receipt for The Municipality Property Tax Payment.
  • If the applicant is any firm, company, or LLP, a PAN card along with the certificate for incorporation is required.
  • NOC from the nearest neighbour
  • Katha extracts
  • Lease documents or consent letters from the property owner.
  • A certified plan for the layout of your trade building
  • Katha Certificate
  • Sanction plan
  • Occupancy certificate

Trade License Fees

The fees for a trade license varies across states since it is issued by the government agencies (Municipals) of the respective state. The license fees are based on the rules and regulations of the respective state. In some states, trade license fees are levied annually. In yet some other states, it is computed based on the yearly turnover of the business.

Different Categories of Trade Licenses

  • Shop License: Dangerous trades like a sale of firewood cracker manufacturer, dhobi shop, and barber shop.
  • Industries license: Small, medium, and large-scale manufacturing.
  • Food establishment license: Restaurants, hotels, food stalls, canteens, vegetables, bakeries, and the sale of meat.

Conclusion

The trade license is one of the most important documents to start a business or a trade in a particular municipal limit. If you don’t have one, you will be penalized or even legal action may be taken against you. So, ensure to obtain one before commencing any trade. Ensure to keep all the required documents ready.

FAQS of Trade License Registration

1. Are trade licenses and GST the same?

GST and trade licenses are not the same. GST registration is not mandatory like a trade license, but it is necessary to operate within a particular municipal limit. Moreover, just because a trade license is not required for registration under GST, it does not mean that GST registration precludes an individual from obtaining a trade license.

2. How many types of trade licenses are there?

There are 6 types of trade licenses based on the nature of the economic activity which defines the legal form of the company. They are namely commercial license, industrial license, tourism license, crafts license, agricultural license, and professional license.

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