A Trade Licence is a letter of authorization that authorizes the applicant (the individual wanting to create a type of business) to carry on a specific trade or business in a specific place. When conducting business or engaging in commerce, it made sure that all safety requirements established by the State Municipal Corporation were obeyed. It protects the locals from any health dangers.
The Licence, however, only permits the holder to engage in the trade or company for which it was issued. Trade Licence is referred to as Gumasta Licence in some states and known by different names in the many parts of the country.
What are the main objectives of a Trade Licence?
The government issues such a Licence to fulfill the requirements of the business. Apart from this, the trade Licence is issued for the following reasons:
- To regulate businesses within a particular locality or municipality.
- Ensure that anti-competitive practices are not followed within a particular locality or municipality.
- To monitor the activities of a business. Apart from this, local authorities can keep a constant check on the activities conducted by a business.
- Issuing such a Licence would indicate that a business is following compliance with respect to the government.
- A local authority can check if the business is breaching any law or causing any nuisance in the society through this Licence.
- Businesses with such licence are more reputed in the eyes of consumers. Consumers would have more confidence in their services.
- By securing a Licence, businesses would not use their residential premises to conduct any business. Hence, this form of regulation ensures that businesses are regulated.
- This form of Licence also regulates the use of environment-friendly substances to conduct activities within a particular locality. Hazardous and other chemical substances are not allowed when it comes to residential and municipal limits.
- Businesses having this form of Licence would take the necessary precautions while carrying out a particular activity. Businesses having this Licence would also follow the guidelines issued by the municipal or state government from time to time.
Who Requires a Trade Licence ?
- Hotels, Restaurants, Canteens, Malls, Theaters, Clubs, Bakery and confectionery shops, Snack shops, Food stalls, Retailers and merchants of commodities, Daily requirement stores.
- Service trades include barbershops, cyber cafés, and lumber shops, as well as all small to medium-sized companies and manufacturing units. Manufacturing and processing units, small, medium, and large-scale companies, and cafes are all examples of manufacturing and processing units.
Procedure to apply for Trade Licence
:- For getting a valid Trade Licence application form and business registration documents the applicant must follow certain procedures. But before proceeding with the same, know what type of Licence you are looking for. Then follow the below procedures:
Visit portal of Respective State Government
:- You should start by going to the state government’s internet portal in question. Log on to the central government website for the national capital’s trade and commerce, for instance, if you are in Delhi.
Fill the required details:-
Second, complete the fields asked for without omitting any crucial information. Due of the importance of every candidate detail. Your application may be rejected if these information are omitted.
Verification of Documents:-
The most important procedure is the verification of the application and the essential documents by the municipal corporation of the specific state. This will help the applicant to ensure their documents and application are validated by the authority.
Registering the Application Number
Finally, when the applicant is done with the application for the trade Licence, track the application status of the application in the portal by using the application number and the registered mobile number.
Thus, these are procedures you should follow for the Trade Licence application online.
Eligibility of Trade Licence
Before you apply for the Application for renewal of the same, the applicant has to pass the eligibility criteria as mentioned below:
- The applicant must have Indian Citizenship:-
One of the most important eligibility criteria the applicant needs to have is that the individual must be a citizen of India. Moreover, they should be permanent residents of India.
- The minimum age of the applicant is 18 years and above:-
The applicant must be 18 years and above to be eligible to apply for a trade Licence and further for its renewal.
- No criminal records in the name of the applicant:-
Another important criterion the applicant must pass is that there should be no criminal record in the name of the applicant.
- The business must be legally acceptable:-
Before you apply for the trade Licence and renewal, the business objectives must be legally acceptable to the government of India. Further by the specific state government as well.
- The application must be submitted 30 days before the day of commencing their business:-
Finally, for business trade Licences application must be submitted 30 days before days of commencing business .Hence, these are some of the eligibility criteria required to apply for a Trade Licence application.
Processing Time for the Trade Licence Application
There is a set processing time for each application, including the application. In major cities, the application process for a Licence takes between 7 and 10 working days. Additionally, smaller cities require more time to travel. The processing time will vary based on the state government, though.
But if the process of the business licence application takes more than 2 weeks, then contact the respective municipal authority of the state. They will let you know about the issues in your application status .
Documents Required for Trade Licence Application and Renewal
There are certain documents required for the Trade Licence application procedure. They are:
- Correctly filled out Application form along with passport-size photographs:-
The first document is of course the correctly filled application form with passport-size photographs. Make sure you fill in the required details along with your latest photographs.
- Aadhar Card details:-
Secondly, along with the application form submit the Aadhar card copy with all the essential details.
- Certified Trade/ Business building layouts:-
Another most important document you need to submit is the certified trade/business building layouts. This will enable the respective state government to validate the trade Licence.
- PAN details and Incorporation Certificate in the case of Company Application:-
While filing for the trade Licence for your company, ensure that you provide the pan card details and incorporation details of the company. This will help in validating the trade Licence application.
- Submit the Property Tax Receipt:-
The next document you should submit is the property tax receipt. This will ensure that your company is not evading tax.
- Rental Agreement or Lease Agreement:-
If your commencement of business in a rental space, then submit the rental agreement or lease agreement of the same.
- Neighbour’s NOC:-
For the approval of your trade Licence, your neighbor’s no-objection certificate is also essential. This will ensure that there is no hurdle in the trade Licence apply online.
- Provide the Khata Certificate:-
The Khata certificate is the document that identifies the owner of the property. For the trade application process and its renewal, the applicant must provide a Khata certificate along with other documents.
- Occupancy Certificate:-
Finally, the most important document to submit is the occupancy certificate of the applicant. This ensures that the building adheres to the building codes of the country and further it is occupiable. Thus, these are important documents you will need to apply for a trade Licence and its renewal.
Trade Licence Validity and Renewal Process
The most important question we all have in our minds is whether the trade Licence is valid and whether it can be renewed. The Trade Licence is valid for one year from the date of issue of the same. The certificate can be renewed every year between Jan 1 to Mar 31.
All you need to do is to apply for the application for renewal of trade Licence within 30 days of the expiry of the previous certificate.
With the coming of the ONLINE mode application process, application for trade Licence online has become easy. You can apply for and renew your online trade Licence rather than wait in long queues. However, make sure you submit the documents required for the renewal of your trade Licence.
Breach or Penalties for not taking Licence
There are severe consequences if the applicant does not take the Licence:
- Once a trade Licence is taken by the applicant, he/ she has to ensure that legal compliance is followed and maintained by the applicant.
- In case the applicant does not secure the trade Licence, then there are different consequences which can be imposed by the relevant authorities.
- If the business is started, its operations without Relevant business Licence, then a penalty or fee would have to be paid.
- The defaulter can also be prosecuted if non-compliance is continued.
Trade Licence Fees
The Licence fees vary from state to state since it is issued by the government agencies (Municipals) of the respective state. The Licence fees are determined based on the rules and regulations prevailing in that respective state. In some states, trade Licence fees are charged on an annual basis .Other states determine it depending on the proportion of annual firm turnover.
Conclusion
While being in addition to requirement by law, obtaining a licence is important step in ensuring company works legally. It builds confidence with stakeholders, clients and prepares the road in expanding and success. This Particular criteria and procedure could differ, but having advantages of having licence is common and can increase credibility and longevity of company. Always put compliance and licensing first in safeguarding the company and benefiting a recognised legal entity in the country.
The types of enterprises that need trade Licence include but not limited to establishments like cafes, restaurants, retail stores, etc.
