Are you starting a new venture and wondering about all the documents you need? On that long list of documents, one of the important ones is a trade license. It is mandatory that a person has it before starting a business in any specific area or unit.
Let us learn in detail what a trade license is, the benefits of availing it, the documents required for a trade license online, and the different categories of a trade license in India.
What is a Trade License?
Trade license was introduced in India 40 years ago. It was mandatory to regulate businesses operating in a particular municipal area. A trade license in India is always issued by the State Government and acts as permission to accomplish a business or trade goods and services in the state or premises that authorized it.
However, it reflects no sort of property ownership. You can only change the goods and services mentioned in the trade license if you get it changed in the document.
It is now mandatory for anyone starting a new business to get a trade license online. To get a trade license online, apply within 15 days of commencing your business operations. The primary reason for issuing trade licenses was to limit the number of people operating businesses in their residential areas.
Main Objectives of a Trade License in India?
The government issues trade licenses to regulate the number of businesses in a locality. However, there are more objectives for administering a trade license.
- To ensure that anti-competitive activities are not practised in a particular area.
- It indicates a business's compliance with Indian laws.
- Consumers put more confidence in businesses with a trade license.
- It helps limit the use of hazardous substances a business uses in any locality. Some localities need help to afford certain business activities, like establishing a factory, which is denied at the time of trade license registration.
- It helps concerned local authorities to check business activities to ensure no business breaches a law or causes a nuisance.
- Since this license regulates a business's location, no owner can operate a business from home.
Different Categories of Trade Licenses
There are three different types categories of trade licenses in India. They are:
Industries License:
This is issued to small, medium, and large manufacturing enterprises or factories.
Food Establishment:
Any establishment that involves the sale of food items, including a restaurant, food stall, meat shops, hotels, canteen, bakeries, and more.
Shop License:
Such a license is issued to businesses that are considered offensive or dangerous, like cracker manufacturers, barber shops, candle manufacturers, laundry service providers, and more.
Eligibility Criteria for Trade License
An applicant must ensure that he satisfies the following criteria before applying for a trade license:
- Minor cannot apply for a trade license. This means that the applicant must be over the age of 18 years.
- The applicant must ensure that his business follows all provisions of Indian law.
- You must ensure no criminal record or conviction is pending under your name.
Documents Required for Trade License Online Application
- License application form
- If the applicant is an individual, documents like an Aadhar card
- If the business property is leased, a lease agreement
- Other documents of occupancy, if any
- Sanction documents
- If the applicant is a corporate organization, then the PAN card, along with the formation documents
- Tax documents
- Any khata extracts or certificates
- A no-objection certificate from the neighbour in case the business operates in a local residential area
A Brief Procedure for Registering for Online
The following requirements are essential for registration depending on the location of the business:
- An applicant can apply for a trade license online or offline as preferred. For the online procedure, the applicant must attach his prescribed documents and proceed with the application. These prescribed documents are submitted to the relevant local authority for the offline method. He also has to fill out different forms with his respective details.
- The applicant must go to the official government web page to file for a trade licence for the online application.
- Now, he will be presented with a pop-up notification regarding the terms and conditions he must adhere to for the trade license application.
- Click on the accept button and move forward.
- Now enter the details in the form with your necessary information regarding the trade license.
- The online portal also has a specific way of authenticating your documents that all applicants must do.
- Once the applicant completes this, he will get a confirmation mail for successful registration.
- After receiving the confirmation, it will take up to 8 to 11 days for you to receive the licence.
- Compared to rural areas, registration is faster in metropolitan cities, and the business receives the license faster.
Conclusion
This post includes all the necessary information about its registration. If you still need help with the trade license registration process, you can always contact Lawgical India, which carries the entire process smoothly without any hassle. They will only ask for your documents once and take care of the whole process themselves. Meanwhile, you can focus on other essential business operations since it is just the initial phase of your business.
FAQs
1. What is a trade license, and why is it needed?
A trade license is an official permit issued by the local municipal authority that allows individuals or businesses to legally conduct trade or commercial activities in a specific area. It ensures that the business complies with safety, health, and zoning regulations.
2. Is it mandatory to have a trade license to start a business in India?
Yes, it is mandatory to apply for a trade license within 15 days of starting your business. Operating without a valid license can lead to fines, penalties, or even closure of your business.
3. Who issues the trade license?
Trade licenses are issued by the local municipal corporation or state government authorities, depending on the location of the business.
4. Can a trade license be used as proof of property ownership?
No, a trade license only grants permission to conduct business activities. It does not imply ownership of the property or premises.
5. What are the types of trade licenses in India?
There are three main categories:
Industry License (for factories and manufacturers)
Food Establishment License (for restaurants, bakeries, hotels, etc.)
Shop License (for general businesses like salons, laundries, etc.)
6. What is the eligibility to apply for a trade license?
The applicant must:
Be at least 18 years old
Have no criminal background
Ensure the business is law-abiding and compliant with local norms
7. What documents are required for applying for a trade license?
Some common documents include:
Application form
Aadhar card or company incorporation certificate
Lease/rent agreement or property papers
PAN card, tax documents, NOC from neighbors (if required)
Sanctioned building plan and khata certificate
8. How long does it take to get a trade license?
After successful application and verification, it typically takes 8 to 11 working days to receive the license, though it may be faster in metro cities.
9. Can I apply for a trade license online?
Yes, most municipal corporations allow online trade license applications via their official websites. You can upload documents, fill out forms, and track application status online.
10. Can Lawgical India help me get a trade license?
Absolutely. Lawgical India handles the end-to-end process of trade license registration, including documentation, filing, and follow-up with authorities—saving you time and effort.
