What Are The Eligibility Requirements For Trade Licenses?

What Are The Eligibility Requirements For Trade Licenses?

Are you planning to launch a brand-new company, and have you considered the paperwork you will need to do so? It is crucial to obtain a business or trade license before beginning operations within the limits of a particular municipality. Please allow us to explain the advantages of obtaining a business license in a concise manner.

Trade licenses are simply licenses or certificates necessary for an individual or a company to operate. This license will most likely be issued by the state government within a given municipality. With this license, the holder can establish a company in a specific area. It is the applicant’s responsibility to ensure that the company complies with the license’s requirements.

This license can only be used for the type of business it was issued for. Further, the license does not allow the individual to secure the property or obtain any legal right to the property where the company operates because it does not allow it. State governments currently regulate trade licensing through municipal corporation statutes, which have been implemented nationwide over the past forty years. Any particular trade or industry will be prevented from causing annoyance or posing a health risk to anyone as a result.

What Are the Different Types of Trade Licenses?

  • Small, medium, and large manufacturing establishments require licenses.
  • A shop license is required for dangerous and offensive businesses such as selling firewood, making crackers or candles, running a barber or laundry shop (dhobi), and others in this category.
  • An establishment license is required to operate a food establishment, such as restaurants, hotels, food stands, canteens, meat and vegetable markets, bakeries, etc.

Know more: how to renew trade license online

Considerations for obtaining a trade license

Commercial license applications require the following types of documentation:

  • Proof of the business’s address
  • A copy of the applicant’s ID
  • Aadhaar card
  • PAN (For proprietorships or firms)
  • Neighbors’ NOC (neighboring property owners)
  • Association Memorandum (MOA)

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Online or offline, you can apply for a business license from the municipal corporation.Does India grant trade licenses to anyone?

For a business license to be granted, the following criteria must be met:

  • Individuals who are 18 years or older; 
  • No history of prior convictions  
  • In order for the business to operate, the law must permit it

Fees for Online Trade Licenses

Business license fees vary from one state to another due to the fact that each state’s government entities (Municipalities) issue the licenses. Each state’s rules and regulations determine how much money is required for license fees. 

Residents of some states are required to pay annual business license fees. Other states, however, determine it based on a proportion of a business’s revenue. It would cost approximately eight thousand rupees to obtain an Online Trade License Certificate.

Trade Licenses vs. Company Registration

Licence for trade

In a particular line of commercial activity, a trade license is an authorization granted by a government body. Each type of business license corresponds to a specific type of business, such as:

  • IT services can only be authorized with a valid OSP license.
  • Food chain operators must be licensed by the FSSAI.
  • A Drug License is required to manufacture and sell a variety of medications, pharmaceuticals, and other products.
  • Ayurvedic products can only be traded with an Ayush License.

A state-issued trade license is required when you begin a new business activity.

Registration of a company

A company can be registered in India under the Companies Act, 2013, which came into effect in 2013. New legal corporations are formed for commercial purposes through this process. 

Through the acquisition of the appropriate licenses, companies registered under the Companies Act of 2013 can engage in any lawful commercial activity. As a result of the Companies Act, several types of businesses can be established as companies:

  • Limited Liability Company
  • Private Limited Company
  • Nidhi Company
  • Producer Company
  • One Person Company (OPC)
  • Section 8 Company

Following the completion of the company registration process, incorporation certificates are granted. This certificate (ROC) is issued by the Registrar of Companies, and it gives Registered Companies their own separate legal entity to operate under.

The process of registering a corporation involves creating a new legal structure. A Trade License, on the other hand, is the authorization granted to an existing business to start a new line of business or commercial activity. A brief description of the differences will be provided in the following section based on validity, renewal, processing time, types, and eligibility.

It is possible for any company already in operation to register itself as a legal entity as well as for any individual to establish a brand-new corporation as a registered company. Obtaining a trade license is one of the certificates that a business entity that has already been registered needs to be able to engage in new activities. Sole proprietorships commonly face investor resistance when compared to businesses governed by legal frameworks, such as limited liability partnerships.


To help you apply for a business license, Vakilsearch assists you. Please fill out the form, and we’ll contact you as soon as possible. Once we receive your document, we will track its progress until it reaches you.

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