What is a Trade License?

A  trade license is a document/certificate that gives permission to the applicant (person seeking to open a business) to commence a particular trade or business in a particular area/location. The Municipal Corporation of the state issues the trade license to the applicants.

A trade license ensures that the business or trade is carried on by adhering to all the standards of safety as issued by the State Municipal Corporation. It protects the residents from being affected by any health hazards. All businesses covered under the State Municipal Corporation Act of the state in which they are located must apply for a trade license.

However, the license does not allow the holder to carry out any other trade or business than for which it is issued. Furthermore, this license does not pass on any kind of property ownership to the holder of the license.

Why Trade License?

In India, a trade license was introduced 40 years ago. The Municipal Corporation Acts of the respective state governments regulate trade licenses. It helps to ensure that no one is severely affected by the nuisance and health hazards of any trade or business.

The state governments mandate a trade license to carry out any particular business or trade in a particular area and to ensure that no one is carrying out any unethical business practices. It allows the government to regulate various trade activities in the country. This license creates harmony in society by ensuring that every business is following the relevant rules, guidelines and the required safety measures.

Documents Required to Apply for a Trade License

• Address proof of the business
• ID proof of the applicant
• Aadhaar card
• PAN of the individual in case of proprietorship, PAN of the partners in case of a firm or PAN of the company or Limited Liability Partnership (LLP)
• Memorandum of Association (MOA), Articles of Association (AOA) and Certificate of Incorporation in case of companies
• Certificate of registration in case of a partnership firm and LLP
• A latest municipal property tax receipt in case the premises are owned, else lease document or consent letter of the owner of the property (NOC) where the business is registered.
• NOC from the pollution control board and fire department, if applicable
• NOC of the neighbours (nearby property owners)
• Katha certificate
• Certified layout plan of the office