Trade Licence: Ensuring the Legality of Your Business Operations

Securing the businesses from doing any type of activity which could result in an unethical practice, has been made mandatory for acquiring a valid Trade Licence in India before the commencement of any business or trade activity. All the business and individual who engage in these business activity should acquire a Trade Licence.

Legal Framework

All the businesses need to obtain a Licence under shop and establishment act, 1953. It provides the requirement which is to be followed to guarantee an enhanced operation of business. 

Trade Licence

This is issued by Licensing department of municipal corporation in form of Document/Certificate. Trade Licence allows business owners to set a particular trade/business in particular area.

The Significance Of Trade Licence In India?

State governments control the trade licence by municipal statutes. It helps in making sure that public is not affected in many ways by any type of annoyance and dangers of any type from business or trade. This makes it mandatory from the government to carry out the business or the trade in particular area and making sure that any unethical business is not being conducted. So, the Significance of Trade Licence is high.

Also the firm follow the appropriate regulations and related norms which adhere to safety protocols, this provides a sense of harmony in the society. Its made mandatory so government could regulate the different commercial activity in the country.

Requirements of Trade Licence:-

• Applicant should be more than 18 years
• Applicant should not have any criminal record
• Nature of Business should be legal

Purpose of a Trade Licence:-

The function of a Licence is to control and monitor the business activity in a specific area. It also holds importance as it guarantees that the firm adhered to various local governmental regulations. It includes the zoning requirement, Infraqstructure, environmental and health law standards. Trade license also require the companies to meet the financial allegiance by paying required taxes and fees.

Who Needs to Obtain a Trade Licence ?

Below Mentioned Entities are in mandate to obtain a Licence from the Municipal Corporation before it starts the business:-

• Local commercial
• CSC (Commercial Shopping Complex)
• Community Center
• LSC (Local Shopping Complex)
• Metropolitan City Center
• Service market/ Service Center
• Pedestrian Shopping Streets
• District Center
• Commercial Areas
• MLU (Mixed Land Use)

Importance of Trade Licence:-

It holds importance due to following reasons:

1. Regulation and Monitoring: Its important to oversee and control the trading activities in a specific area.
2. Public Health: It makes sure that the business operation does not affect or threatens health of general public by enforcing proper practice and preventing improper conduct. 
3. Compliance with Rules: Trade licence gives guarantee to the businesses adhering to the established rules, regulations and standards which promote ethical and lawful operation.
4. Restrictions: These licence limit particular commercial activity which helps to maintain a safe and balanced business environment.
5. Responsibility Oversight: It looks on the obligations of the business owner about trading activities which ensures the accountability.
6. Evidence of Legitimacy: A Trade Licence provides the owner of the business is engaged in a required formalities and ethical business practice of trading which is free from unlawful or unethical practice.

Business Requiring Trade Licence Registration:-

Here are some common types of business Licence that are typically required in India:

1. Shops and Establishments:
   

   :- All the business which involve trading or any commercial activity be it retail stores, restaurants, hotels, theaters, amusement parks and other similar type of establishment usually require a trade Licence from local municipal corporation.

2. Food Establishments:
   

   :- Businesses which are dealing in preparation, sale or distribution of food or beverages which include restaurants, cafes, food stall, food processing unit and catering service require a trade Licence from the Food Safety and Standards Authority of India (FSSAI).

3. Manufacturing Units:
   

   :- Industry which involve manufacturing and production be it factories, workshops and industrial plants are generally required for obtaining a trade Licence which ensures an adherence for safety and environmental regulations.

4. Healthcare Facilities:
   

   :- Hospitals, Clinics, Nursing Homes, Diagnostic Centers and other medical establishments require a trade Licence for ensuring that the required standards and regulations are met for providing healthcare services.

5. Entertainment and Leisure Activities:
   

   :- Businesses which are related to entertainment and leisure be it cinema hall, multiplexes, video games, parlors, gyms, spas and health club need to require a trade Licence for public safety and compliance with the local regulations.

6. Transport Services:
   

   :- Business which offer transportation service like auto rickshaw, taxi, can and goods carrier require a trade Licence for operating legally.

7. Construction and Real Estate:
   

   :- Real Estate developers, construction companies and contractors require a trade Licence for carrying out their activities within particular municipal limits.

8. Fireworks and Explosives:
   

   :- Businesses which manufacture, store, sale or use fireworks and explosive materials are subjected to strict regulations and generally require a trade Licence.

9. Liquor Establishments:
   

   :- Business which sell alcoholic product and distribution of these alcoholic beverages be it liquor shops, bars and pubs require a trade Licence with the necessary permit from the required authorities.

10. Street Vendors and Hawkers:
    

    :- People and the groups which are engaged in street vending or hawking activity require a Licence or particular vendor Licence from the local bodies.

Trade Licence Registration Fee:-

Trade Licence are provided by the local government, the cost of this registration could differ between these states. The fee for this is determined according to laws and regulations of different states. This fee is calculated annually in various states. Whereas, on the other hand other state have the fees according to portion of a company’s yearly revenue. It ensures full compliance during registration procedure also its much important to be aware of unique pricing structure relevant to the state.

Penal Provision For Violation of Trade Licence:- 

If an individual starts a business without acquiring a Licence, the government will impose sanctions in form of fee and penalty. It also results in shutting down the business. So, if an individual starts a business and failed to comply with the rules and regulations provided by the government, the person is liable for penalty.

Individuals who start a business without any licence can face consequences which can even lead to closure of the facility.

• If the entity violates the provision of Licence a particular penalty could be imposed on them.
• If the renewal of this trade license is delayed, penalty of 50% licence fee will b imposed.
• There could be situation in which defaulter is target for the appropriate legal action.

Consequences of Breach:- 

There are some consequences of breach of Licence:-

• After acquiring a License, the applicant should ensure that legal compliance is followed and maintained properly.
• Incase applicant is unsuccessful in acquiring this licence the authorities could place many type of penalties.
• If any business is launched and continues operating without a required business license fines and charges for the same will be imposed.

Validity :-

Validity of Licence which is issued by the Municipal Authority in India is 1 year and is required to be renewed every year.

Renewal:-

The Licence could be renewed subject to the following conditions:

• Generally renewed between 1st january to 31 March of financial year.
• Valid for 1 Year
• The candidate should submit an application.
• Thirty days before the expiration.
• Documents should be submitted to appropriate authority for renewing certificate.

Procedure:-

Submitting the Application:-

Apply in the state government portal or office. It can differ depending on the state.

Verification:-

The procedure of State Licence is provided after completion of evaluation of documents 

Duration of Issuance of Certificate:-

Successful completion of Evaluation of documents is approximately ten to fifteen days.