December 30, 2022
Swathi v prabhu

Trade license- objectives, eligibility and documents

A trade license is one of the most important documents required to open any establishment. A trade license is a proof that the government has provided the said establishment permission to operate their business in the specific area.

The state government of India is responsible for issuing trade licenses. Any proprietor or business owner with the help of a trade license can carry forward a business without any disruptions.

However, the said individual cannot operate any other business other than the one for which the trade license was issued. Furthermore, the license also restricts the individual to secure property or any other form of legal entitlement of the property where the business is carried on.

Let us understand a bit more about trade licenses and their varied purposes.

What are the objectives of a trade license?

Any entity must have a trade license if its objective is to conduct a business. But let us understand the objectives of a trade license

1. Regulating a business within a particular locality or municipality

2. To make sure there are no anti-competitive practices followed in that locality or municipality

3. To monitor the activities of the business. Making sure they are conducting their operations as per the requirements in the trade license

4. Issuing a trade license is mandatory as per the provisions established by the government. To follow the same.

5. The local authority can check and make sure if the respective business is breaking any laws in the locality in which it is established

6. To attain the confidence of the consumers. Businesses with trade licenses are more trusted than a business without any.

Now that we have cleared the purposes or objectives for which a trade license is issued, let us understand the different types of trade licenses issued

Different categories of trade licenses issued

1. Industry license: small, medium, or large-scale manufacturing factories

2. Shop license: dangerous and offensive trades like the sale of firewood, cracker manufacture, candle manufacture, barber shop, laundry shop, etc.

3. Food establishment license: restaurant, hotels, canteens, sale of meat and vegetables, bakeries.

Based on the type of business, these are the different categories of trade licenses issued.

Eligibility for applying for a trade license

 The requirement which makes an individual eligible for applying a trade license is:-

1. The individual must be 18 years or more

2. The individual must not have any criminal records

3. It must a business which is legally permissible as per the law

Documents required to apply for a trade license

1. Address proof of business

2. ID proof of the applicant

3. Aadhaar card

4. PAN of the individual in case of sole proprietorship or PAN of the firm in case of a company

5. Certification of incorporation of the company

6. Municipal property tax receipt in case the premises are owned

7. Lease document or consent letter of the owner if the property is rented or leased

8. NOC of neighbors

9. Certified layout plan of the office

There is a choice to apply either online or offline through your local municipal corporation of your respective state

Trade license fees

Since the trade license is issued by the state government, the trade license fees depend on the state-to-state as set by the respective governments. The rules and regulations for the management of business set by that particular state determine its license fees.

Some states charge the trade license fees on an annual basis, whereas, others charge them based on the respective business turnover of the state.

Trade license renewal

An entity needs to have a trade license every year of business. Trade license renewal is mandatory every year. The date of renewal depends on state-to-state as per the rules and regulations of that state. However, the respective entity must renew the license one month before the due date.


1. How long will it take for the entire process? 

It will take around 2 weeks to complete the entire process of obtaining a trade license. 

2. If I don’t get my trade license what will happen?

Running an unapproved Trade is an offense. The concerned authorities may seize or lock your Trade business with or without prior intimation.

3. Can a license be suspended and how can it happen?

In the case, that the license holder is violating the license conditions and disturbing neighbors or the environment.


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