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Trade License

A trade license is a document/certificate that gives the applicant (person seeking to open a business) permission to start a specific trade or business in a given area/location. The license does not, however, authorize the holder to conduct any other trad


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A trade license is a document/certificate that gives the applicant (person seeking to open a business) permission to start a specific trade or business in a given area/location. The license does not, however, authorize the holder to conduct any other trade or company than it is provided for. In addition, this license does not transfer any form of property ownership on to the license holder. In addition, this license does not transfer any form of property ownership on to the license holder.

Trade license has been implemented in the country over the past forty years and is governed by state governments by municipal corporate acts. This helps to ensure that no one is adversely impacted by any trade or business' nuisance and health threat. The government has made it compulsory to conduct any particular business or trade in a particular region and to ensure that no one conducts any unethical business practices. This license provides a society-wide peace where every company follows applicable laws, guidelines and safety measures. This license was made mandatory to ensure the government would control the country's different trading activities. The central aim of enforcing this is to regulate the locations by preventing people from carrying out other forms of business from their home location to protect the business climate and the local community.

Who Needs General trade License:

Trade License is a certificate that grants permission to carry out specific business or trade for which it is issued. It helps to ensure that no one is adversely impacted by any trade or business' nuisance and health hazards. By issuing the concerned state's General Trade license and Health Trade License Municipal Corporation ensures that these establishments comply with the hygiene and safety standards that are important to public health. Municipal Corporation issues General Trade / Storage License to Traders / Establishment for Allowable Trade Activities. Business carrying out activities like

➲ Electronics shops

➲ Shoe sale shop

➲ Candles Shop

➲ Brushes Shop

➲ Furniture shops

➲ Mobile phone , charger, telephone Shop

➲ Spectacles Shop

➲ Umbrellas Shop

➲ Timber Shop

➲ Sanitary goods Shop

➲ Bricks and Tiles Shop

➲ Stationery/Books/Gifts/Book binding

➲ Photostat/Fax/STD/PCO

➲ Cyber cafe/ Call phone booths

➲ LPG booking office/Showroom without LPG cylinders

➲ Tailoring shop

➲ Electrical/Electronic repair shop

➲ Photo studio

➲ Cable TV/DTH Operation

➲ Hosiery/Readymade Garments/Cloth shop

➲ Cycle Repair Shop

➲ Hardware shops

Different types of Trade License:

a. Industries license: Manufacturing factories of small, medium and large scale (Factory license)

b. Shop license: Dangerous and violent trades such as firewood sales, cracker maker, maker of candles, barbershop, dhobi shop, etc.

C. License for Food Establishments: Restaurants, hotels, food stand, canteen, meat & vegetable sales, bakeries, etc

The main aim of this is to monitor the locations by preventing people from conducting those types of business from their home location in order to preserve the business atmosphere

A. Regulating trade is necessary to ensure that people are not adversely affected by health hazards & nuisance due to inappropriate trading.

B. A means for ensuring the company is carried out in compliance with the applicable laws and health guidelines.

C. A Registered company will have greater credibility than an unregistered organization and will draw buyers and investors.

D. It protects the owners from other forms of liability.

E. Companies with better business practices attract various investor groups and other business associations Practice the individual may apply for Trade License Registration.

F. To do ethical business, this guarantees security measures and guidelines.

Benefits of Trade Licence

1. A licensed company can enjoy greater popularity and draw buyers and investors than an unregistered organization.

2. Protects owners from other forms of liability

3. Companies with strong best practices draw a number of investor groups and other business organizations.

4. In order to conduct an ethical business, an individual can apply to obtain a Trade License Registration which ensures safety measures and guidelines.

5. If a person does not obtain a trade license as required by law and enters into any company, the government can impose a fine and a penalty on that person. It may also result in the closure of such a company.

Steps for Registration:

Step1 File application in the prescribed format

Step 2 Attach the required attachment

Step 3 Pay the required amount of fees

Step 4 After 7-10 working days license will be issued

(License will be issued by verification of on applied form by authorized authority)

Documents required for processing trade license:

➲ Business address proof (rent agreement/ownership proof)

➲ Id proof of applicant (PAN & Aadhar)

➲ PAN of entity and applicant

➲ Address proof of the applicant

➲ Canceled cheque copy

➲ Business registration copy (COI/ Deed copy)

➲ Layout Plan

➲ Affidavit

➲ Electricity bill / Water bill

➲ Authorization letter

➲ Fire NOC (if premises is more than 250 sq meters) or Else fire extinguisher receipt


Before granting the trade license and conducting the legitimate business operations, the Municipal Corporation's Licensing Department[1] must ensure that the-

➲  The applicant got 18 years of age,
➲  The candidate has no criminal records,
➲  Enterprise permissibility on a legal basis.
Trade license in India grants permission to carry out the business activities for which the Authority granted the license


An issued Health Trade license is valid for one year and application for renewal must be filed before thirty days (30 days) of the expiry date.

For renewal same application will be filed after selection of renewal option and for renewal one additional document will be needed that is existing license copy. If the renewal process is delayed, then fine may be attracted depending on the issuing authority's rules and regulations.

Documents that must be submitted for license renewal –

a. Trade License Original copy;

b. Challans of the preceding year;

c. Receipt of land tax charged up to the present date.

Consequences of Non-obtaining License

It is of utmost importance to apply for a trade license before beginning any business operation, as it serves as evidence that the practices to be carried out by the applicant do not result in any kind of health problem. This further guarantees the applicant organization does not carry out any other operation that would be deemed immoral.

Furthermore, the fee structure for obtaining a trade license is governed by the state the applicant has applied for. Fees differ according to state. It may be in the form of a certain collection of numbers or the annual sales that measure these.

If an individual starts a business without obtaining a Trade License, the government imposes penal provisions in the form of fees and penalties on such individuals. Additionally, it also contributes to business shutdown. In the layman language, if the person starts the business and fails to comply with the rules and regulations laid down by the Government and the Authority concerned, that person shall be liable for the penalty as prescribed by the Government.

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