A trade license is needed by a business in order to legally carry out various activities. It is a legal document that provides legitimacy to a company and gives it the ability to perform certain actions in the country in which the trade license was granted. This type of license is only good for the activity it was originally granted for. It does not provide any special permission to carry out an activity other than the one it was issued for.
One reason you need a trade license is that it proves that the activities to be carried out by your company are not going to present any type of health hazard. It also shows your company is not going to perform any actions that would be considered a nuisance. The fee that you will have to pay to get a trade license is determined by the state you are applying for it in. Some cities have their own fees you will have to pay; these fees may be a set amount, or they may be determined by your annual sales.
Regulations under the Shop and Establishment Actlays down the following rules based on which the trade license is issued. Every establishment/shop must compulsorily be registered under this Act within 30 days of commencement of work. Shops and Establishments Act regulates the following aspects of doing business in India:
Businesses Requiring Trade License
All commercial establishment that falls under the following categories must obtain trade license:
Requirement to Obtain Trade License
The government has made it necessary for one to obtain trade license to ensure that the person is not carrying out unethical business practices and is following the relevant rules, safety measures and guidelines. A licensed business protects its owners against certain types of liability. If damage or injury occurs the business actions or doings, the personal finances would not be at stake in any settlement. The various types of trade licenses offer different levels of protection.
Categories of Trade license
There are various other provisions, rules, and regulations that are required to be followed by the registered person. In case of failure to comply with the registration requirements of trade license and commencing any trade activity before the issuance of this license, the person in the default will be liable to pay prescribed penalty. Furthermore, legal action can also be taken against the defaulter.
List of Required Documents
The following information or documents/records are to be furnished at the time of submitting the application form for obtaining Delhi trade license.