Trade License

Trade License

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:

  • The working hours on a daily and weekly basis.
  • Provisions for spread-over, rest interval, opening, and closing hours closed days, national and religious holidays, overtime work.
  • Regulation of employment norms for children, young persons, and women.
  • Rules and regulations concerning paid leaves.
  • Rules and conditions for employment and termination of service.
  • Regulations concerning the maintenance of records and registers.
  • Obligations of employers as well as employees.
  • Precautions against fire, accidents, etc.
  • Regulations concerning the display of notices.
  • The responsibility of the employer and employee towards each other, the firm and the society.
Businesses Requiring Trade License

All commercial establishment that falls under the following categories must obtain trade license:

  • An establishment or administrative service in which persons employed or mainly engaged in office work.
  • A hotel, restaurant, boarding or eating house, a cafe or any other refreshment house.
  • A theatre, cinema or any other place of public amusement or entertainment.
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
  • Industries license: small, medium and large scale manufacturing factories
  • Shop license: Dangerous and Offensive trades like a sale of firewood, cracker manufacturer, candle manufacturer, barber shop, dhobi shop etc.
  • Food establishment license: Restaurants, hotels, food stall, canteen, the sale of meat & vegetables, bakeries etc.
Penal provisions

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.

  • Address Proof and Identity Proof – Individual.
  • Affidavit
  • Certificate of Incorporation, MOA and AOA of the company.
  • Cancelled Cheque and Bank Statement.
  • Certificate of Incorporation, MOA and AOA of the company.
  • Legal Occupancy document proof of the establishment/unit or allotment letter of the government agency.
  • Documentary proof of establishment of trade.
  • Lease Deed of the constitution.
  • Documentary proof regarding the non-existence of unauthorised construction.
  • NOC (No Objection Certificate) from the land-owning agency.
Documents required for the renewal of a Trade license:
  • Address Proof and Identity Proof
  • Original License copy
  • Old G-8 receipt
  • Application for renewal of a license
Documents required for the issue of a duplicate trade license:
  • First Information Report (FIR)
  • Indemnity Bond in prescribed format.

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