Structured Biiz

Trade License

In order to commence a business or profession in a particular area or location, a written permission from an appropriate Governmental authority is required to be sought. A trade license is the written document granting such permission. Trade licenses have been in operation for almost more than four decades now and seeking it is a mandatory pre-requisite for commencing a business. The procedure of granting such licenses is governed by the Municipal Acts of the respective State Government in which the license is required to be sought.

Is It required by service providers working from home?

Will depend on the type of license. For e.g., in case of Shop and Establishment license, the applicant just needs to file an intimation if the number of employees does not exceed 10. The license would be required only if employees exceed 10.

What are the features of Trade licenses?

Objectives of Trade Licenses

This license enables the local and state governmental bodies to ensure that no health hazards or nuisance is created by a specific trade or business. It enables the authorities to maintain control and harmony in the society. Trade license ensures that all businesses are following the relevant regulations, safety measures and guidelines drawn by the Government in this behalf. Through this license, the Government can police the trade activities taking place in the nation. The principal objective of issuing a trade license is to ensure that certain businesses are not conducted in from their home locations and are steered from more appropriate locations considering the environmental and other factors.

Authority issuing a Trade License

A trade license is issued by the local Municipal Corporation having jurisdiction over the area from which such license is sought. The ‘Licensing Department’ of the Municipal Corporation in various departments of the Government such as Health, Engineering, etc are the ones governing the issue of trade licenses. The permission of commencing the business is granted by the Municipal Corporation by way of letters or document or certificate. Considering that the granting of license falls in the ambit of the State Government, the manner and format of the trade license slightly varies from state to state.

Categories of a Trade License

Industries License

Shop License

Food & Establishment License

This license is required to be sought by large, medium and small scale manufacturing industries.

This license is required to be sought by businessmen dealing in dangerous and offensive trades such as sale of firewood, manufacturing of fire crackers, etc. It is also required to be sought for commencing other business activities like a barbar shop, etc

This license is required to be sought by restaurant owners, running a canteen business, operating a food stall, hotels, shop for sale of meat, bakery items, vegetables, etc.

Eligibility for seeking a Trade License?

What are the documents required for seeking a Trade License?

 The documentation required to be submitted in order to seek a trade license depends on the nature of business for which the license is sought as well as the state in which it is sought. In general, the following documents are required to be sought:

Processing Time

Fees Structure

Penal Provisions

The process of seeking the license in metro cities generally takes 7 to 10 working days, subject to availability of appropriate documentation. It may take slightly longer for seeking this license in rural areas.

The fees for seeking this license depends on the nature of license sought. The fees is generally in the range of INR 5,000 to INR 8,000/-.

Various statutory fines and penalties may be levied in case where the business is commenced without seeking a trade license. It may even lead to closure of business in some cases. Legal action can be taken against the defaulter.

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