What is a Trade License?

An official document or certificate granted by a state's Municipal Corporation that permits an applicant, or an individual looking to start a business, to engage in a certain trade or business activity within a set area or location is called a trade licence.

This licence protects locals from possible health risks by guaranteeing that the company abides by all safety requirements set forth by the State Municipal Corporation. All companies covered by the State Municipal Corporation Act of the relevant state are required to get a trade licence.

It's crucial to remember that the holder of a trade licence is prohibited from using it for any other type of trade or company activity. Furthermore, the licence holder does not acquire any property ownership.

Main Objectives of a Trade License

Ensuring that company operations within a specified area are regulated and managed is the main goal of a trade licence. This licensing system oversees and manages the urban business landscape, assisting local authorities in maintaining public health, safety, and welfare. The government makes sure that firms don't have a harmful impact on the community and environment by requiring a trade licence.

Advantages of Trade License

The advantages of obtaining a Trade License are listed as follows

• Legal Compliance: Getting a trade licence guarantees that your company follows the rules set forth by the local government or municipality.
• Public Safety: Businesses that hold trade licenses are frequently obliged to abide by safety guidelines and rules, which enhances general public safety.
• Business Credibility: Possessing a trade licence might help your company become more credible in the eyes of partners, suppliers, and customers.
• Regulatory Compliance: By assisting companies in adhering to different regulations, trade licenses help them stay out of trouble with the law and prevent fines and penalties.
• Access to Government Support: In order to be eligible for some government programs, incentives, or perks, firms may need to hold a current trade licence.
• Establishing Business Legitimacy: When interacting with customers, banks, or investors, a trade licence can be used as evidence of your company's legitimacy.
• Facilitates Expansion: When requesting permissions or approvals for new projects or endeavours, or when growing your business operations, a trade licence may be required.

Businesses Requiring Trade License Registration

• Shops and businesses: Local municipal corporations normally require a trade licence for retail stores, restaurants, hotels, theatres, amusement parks and similar businesses involved in trading or commercial operations.
• Food Establishments: In addition to an FSSAI license, trade licenses are frequently needed for restaurants, cafés, food stalls, food processing facilities, and catering services that prepare, sell, or distribute food and beverages.
• Manufacturing Units: In order to assure compliance with safety and environmental standards, factories, workshops, and industrial plants engaged in manufacturing and production are typically required to get a trade licence.
• Healthcare Facilities: To guarantee they fulfil the requirements for offering healthcare services, hospitals, clinics, retirement homes, and diagnostic centres must get a trade licence.
• Entertainment and Leisure Activities: For the sake of public safety and regulatory compliance, movie theatres, multiplexes, video game parlours, gyms, spas and health clubs that engage in entertainment and leisure activities usually need a trade licence.
• Transport Services: In order to operate lawfully, auto rickshaws, taxis, taxi aggregators, and freight carriers that provide transport services may require a trade licence.
• Construction and Real Estate: In order to operate inside certain municipal boundaries, contractors, real estate developers, and construction companies may need a trade licence.
• Explosives and fireworks: Companies that produce, store, sell, or use explosive materials or fireworks are subject to tight laws and typically require a trade licence.
• Liquor Establishments: Trade licenses and permissions are necessary from the appropriate authorities for liquor stores, pubs, and bars that sell and distribute alcoholic beverages.
• Street Vendors and Hawkers: Local authorities may need a trade licence or specialised vendor licence from individuals or groups involved in street vending or hawking activities.

Trade License Types That the Municipality Issues:

1. Type A: Necessary for every establishment that serves food.
2. Type B: Awarded to manufacturing and processing facilities, like milling units, that use electricity and machinery.
3. Type C: Designed for high-risk operations, such as the manufacture of explosives and wood and timber constructions.

Gumasta License

In Maharashtra, a trade license is known as a Gumasta License. In other parts of the country, Trade Licenses are known by different names.

Eligibility to Apply for a Trade License

The eligibility criteria to Apply for a Trade License are listed as follows:

• ✔Fulfilling the Legal Age Requirement: In order to be eligible for a trade licence, applicants must be older than eighteen.
• ✔ No Criminal History: To be eligible for a trade licence, applicants must not have a history of criminal activity.
• ✔Legally Permissible Business: The planned business must abide by all legal rules and regulations in order to be eligible for a trade licence.

Documents Required for Trade License

The following documents are required to apply for Trade License :

• ✔Completed Form-353: The municipality's application form needs to be correctly completed and turned in.
• ✔ Letter of Approval: It can be necessary to obtain a letter of approval from the owner or from a neighbouring owner of commercial real estate.
• ✔City Census Map: It is essential to have a city census map showing the location of the retail property.
• ✔Tax Statements: You may be required to produce tax statements pertaining to the business or property.
• ✔Building Plan (if applicable): A building plan may be necessary if the organisation works with explosives or poisonous materials.
• ✔Extra Documentation: During registration, the Municipal Ward Officer has the right to ask for extra documentation.

Procedure for Applying Trade License

Applications for trade licenses can be filed offline or online. The city municipal corporation in charge of the neighbourhood where the business is located must receive them. Depending on the State Municipal Corporation Act, different states have different deadlines for submitting applications. While some require them to be submitted before company begins, others let them be submitted up to 30 days after operations begin.

Step 1: Fill Out the Application Form

Acquire the trade licence application form from the website or office of the relevant local municipal government.

Complete the form completely, giving all the information about your personal and business facts that are asked for.

Step 2: Submit the Application

Whether in person or online, deliver the filled-out application form and other necessary paperwork to the local authorities, depending on the system used by the municipality.

Pay the application fee, which varies depending on the type of business, size, and location.

Step 3: Municipal Inspection

Occasionally, a municipal inspector will come to your place of business to confirm the information you included in your application and make sure that local environmental, health, and safety regulations are being followed.

Step 4: Obtain the License

Your trade licence will be issued to you upon approval of your application. Although it can take longer, approval usually takes a few weeks.

Depending on the procedure followed by the local government, you may obtain the trade licence online, by mail, or in person.

Step 5: Renewal

Recall that a trade license needs to be renewed every year after its normal one-year expiration date. To prevent fines, make sure you remember when your licence expires and submit a renewal application together with the necessary payment before then.

Penalties for Failure to Comply

Fines, penalties, and even business closure may result from operating a business without a current trade licence or from breaking the terms of the licence.

In India, having a trade licence is essential to running a business successfully and lawfully. In addition to fostering confidence among stakeholders and customers, it guarantees adherence to local regulations.

Taxhint Advisors Can Help You Easily Get Your Trade License

Taxhint Advisors makes the difficult process of acquiring a trade licence easier for businesses by providing all-inclusive advice. From submitting the application until getting the licence, our team of professionals helps clients at every stage. We make sure that the required paperwork is correctly created and submitted to the appropriate authorities since we have a thorough understanding of the regulatory requirements and procedures.

Businesses may assure legal compliance, save time and effort, and speed the trade licence application process by selecting Taxhint Advsors.