What is Trade License ? What are the benefits of Trade License ?

 

Trade license in India

Trade license is a legal permission to businesses to conduct commercial activities within a specific jurisdiction. The license is issued by the municipal corporation of the city or town where the business is located. The main motive of the license is to ensure that businesses comply with the legal requirements laid down by the government and operate in a safe and healthy environment.

To apply for trade license in India, businessman needs to visit the website of local Municipal Corporation. There is a form to fill the details of business, such as its name, address, nature of business, and the number of employees. In addition to this, businessman may be required to submit certain documents, such as proof of ownership or tenancy, latest electricity bill, proof of identity and address, and a No Objection Certificate (NOC) from the owner of the property.

It is mandatory for a businessman to obtain a trade license in India as operating without license can result in legal action and fines. Additionally, having a trade license the business can establish trust with customers and suppliers.

Benefits of trade license

There are so many benefits of obtaining a trade license for businesses in India. Some of the main benefits are as follows:

Legal identity: A trade license provides businesses with legal identity and establishes their validity. It provides an assurance to the customers, suppliers, and other stakeholders that the business is operating within the bounds of the law.

Compliances Assurance: It is ensures by obtaining trade license that businesses is running within the legal obligation and following the legal compliances laid down by the government. This includes regulations related to safety, hygiene, and public health.

Protection for businesses: It is a protection to businesses by ensuring that they operate in a safe and healthy environment. This protects the businessman and his employees from potential hazards and accidents.

Increases Credibility:  Trade license can enhance the credibility of the business to its stake holders that the business is serious and committed to providing quality products or services to its customers.

Eligible for government schemes: Businesses having a trade license are eligible to avail for various government schemes and programs. This includes access to loans, subsidies, and other financial assistance provided by the government.

Create a Brand: A trade license can also be used as a branding tool to promote the business. It can be displayed on every promotional material and on the business website to build brand awareness and also on the premises of the business.

Overall, every business must apply for trade license because it is essential for businesses in India as it is legal obligation to the business having a lot of benefits as well.

Fees for trade license

The fees for an application of trade license in India may vary depending on the nature, size and location of the business where it is located. The fee structure is determined by the respective state governments or municipal corporations and can vary from state to state. Generally, the fees are calculated based on factors such as the number of employees, type of business, the area of the business premises, and the duration of the license. In Delhi, the trade license fee may range from Rs. 250 to Rs. 20,000 per year, depending on the nature of the business and the size of the premises. In Mumbai, the trade license fee can range from Rs. 500 to Rs. 2,000 per year for small businesses, while large businesses may have to pay higher fees. It is important to note that the trade license needs to be renewed periodically, typically on an annual basis.

 CA KHALID REHMAN

(M.Com,Chartered Accountant)

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