Trade Licence - Why is it needed? - By Egniol

Trade Licence – Why is it needed?

What exactly is a trade licence?

The common definition of a trade licence is simple and somewhat legalistic. A trade licence document grants you the right to conduct business in a specific location. It does not refer to any kind of property ownership and does not allow you to conduct any other business than the one for which it was issued.

Municipal cooperation’s licence department issues licences in various departments such as health, industries, and engineering.

In order to regulate in domestic and international cities, the government authorises legal agreements of trade licence. It gives permission letters or documents to conduct trade or business in the area where it is located. The rules and regulations of state/local government agencies (Municipals) govern the issuance of trade licences.

Trade licences have been introduced in India over the last 40 years and are regulated by the state government through municipal corporation acts. It is a method of regulating and conducting any type of business from a specific location. It has ensured that no one is harmed or inconvenienced as a result of improperly carrying out a trade. The cost of obtaining a trade licence varies by state. Some cities collect business licence fees on an annual or yearly basis, while others receive fees based on the annual sales of the business.

The main goal of a trade licence is to restrict people from conducting any type of business from their residences by maintaining the business environment and the locality environment.

Trade licence classifications include

Trade Licence - Why is it needed? - By Egniol
  • Hotels, restaurants, canteens, food stands, bakeries, the sale of vegetables and meat, etc., require a food establishment licence.
  • Small and large-scale manufacturing facilities, cyber cafés, etc. are licenced as industries.
  • A shop licence is required for a barbershop, dhobi shop, candle maker, etc.

Eligibility for a trade licence

  • Individual must have attained minimum age (18 years)
  • Individual must not have a criminal record
  • A company must be able to perform legal work.

Documents required

Trade Licence - Why is it needed? - By Egniol
  • The lease documents/agreement for the premises are displayed.
  • Occupation certificate
  • Proof of identification of the applicant (for individual it is aadhaar card and for company, it is PAN card & certificate of incorporation)
  • Certificate of registration from the relevant authority
  • Three important considerations prior to application:
  • Before starting a business, an application must be submitted.
  • Renewal applications must be submitted 30 days prior to the expiration of the licence.
  • Once a licence is issued, it must be renewed annually.

Procedure duration

In metropolitan areas, a business licence must be obtained within seven to ten days; if documents are not filled out according to the rules, the process can take as long as thirty-five to forty working days. In other small cities and rural areas, the licence must be obtained within 30 days of business opening.

The Importance of a Trade License

A valid trade licence is obligatory under the law for anyone who successfully runs a commercial enterprise. You are already familiar with a licence that is analogous to a trade licence, which is a driver’s licence. Because he does not have a current driver’s licence, he will be issued penalty notices. A business licence is a useful analogy to use when thinking about this topic. In a nutshell, “a business that lacks a trade licence can be considered illegal and must submit a massive amount of money based on the nature of its operations.”

If you need any kind of consultation regarding Trade Licensing, then feel free to connect with Egniol.

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