A trade license is a document/certificate that gives permission for a person (looking to open a business) to start a trade or business in a specific area or location.
By complying with all the standards of safety issued by the State Municipal Corporation, it ensured that the business or trade was conducted safely. It protected the residents from health hazards.
It does not, however, authorize the license holder to carry out any other trade or business than that for which it was issued. Furthermore, it does not convey any property ownership to the license holder.
This document ensures that the business is in compliance with the stipulated rules and ethical codes. It is mandated by law for the purpose of authorizing an individual or party to commence a business. Obtaining a trade license in Tamil Nadu is a step-by-step guide to obtaining one, which could endanger the validity of the business and result in heavy penalties.
The purpose of a trade license?
Trade licenses were introduced forty years ago in the country and are now regulated by state governments through municipal corporation acts.
By doing this, we ensure that no one is negatively affected by nuisances and health hazards associated with any trade or business.
In order to ensure that no unethical business practices are carried out in any particular area, the government mandated that certain businesses or trades be conducted there.
Having this license ensures that all businesses follow relevant rules and guidelines and adhere to safety measures. This license was made compulsory so the government can regulate various trade activities in the country.
In order to maintain the business environment and locality environment, issuing a license like this is aimed at restricting certain types of businesses from being conducted at home.
Qualifications for applying for a trade license
In order to apply for a trade license, you must meet the following conditions:
- An applicant must be over the age of 18
- There should be no criminal history on the applicant
- A legal permit should be required for the business
Application for a trade license: documents required
Trade license applications require the following documentation:
- Business address proof
- Applicant’s ID proof
- Id card for Aadhaar
- Individual PAN if proprietorship, otherwise firm PAN if company
- In the case of companies, the Memorandum of Association (MOA) is required
- For companies, certification of incorporation is required
- Alternatively, a lease document or consent letter from the owner of the property where the business is located, if the premises are owned.
- (Nearby property owners’ NOC)
- Plan of the office layout certified by the company
Through your local municipal corporation, you can apply online or offline for a trade license.
Fees for trading licenses
Government agencies (Municipals) are responsible for issuing trade licenses, so the fees vary from state to state. Trade license fees in some states are charged on an annual basis. They are determined based on the rules and regulations governing that specific state. While in other states, they are calculated based on the percentage of business turnover.