Trade License- Why is it needed?

What is a Trade License?

A trade license is a document/certificate that gives the permission to the applicant (person seeking to open a business) to commence a particular trade or business in a particular area/location. However, the license does not allow the holder to any other trade or business than for it is issued. Furthermore, this license does not pass on any kind of property ownership to the holder of the license.

When might you need a trade license?

If you are involved in trading, a number of different types of licenses may be required depending on the type of business you are involved in.

Street trading:

A trade license is required by all traders who sell or offer anything for sale  on the street (referred to in documents as a ‘street trader’). There are very few limited exceptions to this rule. If trading on private land, you may not require consent. However, in some cases you may still need to apply for a trade license.

A street trader who is trading without a trade license is committing an illegal offence. You can get a trade license by completing the relevant application form and sending it together with a fee to your local authority.

Online trading:

Those who trade online are unlikely to require a trade license. However, if you trade online it is imperative that you keep an accurate record of your earnings for income tax purposes.

Export/import licenses:

If you are involved in foreign trade, license to export or import goods/services may be required. Import and export licenses may prove very expensive dependent on the quantity and value of the goods/ service in question.

If you are involved in an international sale of goods/services agreement the contract should stipulate who is to pay the costs of export or import licenses and clearances. If as a seller/service provider you agree to bear these costs, you should try to factor this in when you are negotiating the sale price.

Why Trade License?

This license creates a harmony in the society that every business is following relevant rules, guidelines and obeying the safety measures. This license was made obligatory to make sure that the government can regulate various trade activities in the country. The core objective of issuing this is to control the locations by restricting the people from executing certain types of businesses from their home location to maintain the business environment and locality environment.

Who can issue a Trade license?

It is issued by the licensing department of the municipal corporation in various departments like industries, engineering, health etc. The government of India authorizes the license in a manner to regulate in cities across the country. It grants permission by the way of letters or documents/certificates to carry on any business or trade where it is located. The issuance of the license varies from state to state depending on the local government agencies (Municipals) rule and regulations.

Eligibility for a Trade license

a. The applicant must have crossed the age of 18 years

b. The applicant must not have any criminal records

c. Business must be legally permissible.

Documents need to be submitted for Trade License as per BBMP (Bruhat Bengaluru Mahanagara Palike)

In order to apply for a trade license, the applicant is required to make an application and submit the same to the concerned Municipal Corporation along with all the necessary documents. There are different documents that required to be provided depending on the type of business intended to carry on.

a.      Application in the prescribed Form b.

b.      If the applicant is any Firm, LLP or a Company, their PAN Card, along with the incorporation certificate.

c.      In the case of an individual applicant, his/her Aadhaar Card is mandatory.

d.      Latest Municipality Property Tax Payment Receipt.

e.      Lease documents or consent letter from the owner of the property. f. NOC from your immediate neighbour

f.       A certified layout plan of your trade building showing the business, working or washing or resting areas

g.      Katha extracts

h.      Katha certificate

i.       Sanction plan

j.       Occupancy certificate (OC)

Processing Time

In general, it takes 7-10 days’ time to process the application for a Trade license in metro cities. However, in other small cities and rural areas, it takes longer.