An individual who is commencing a new business needs to get the business registered with the local government unless he is doing the business with his own name like James plumber. However, registration of business is different from obtaining trade license. Trade license is the permission that one needs to get from the government to begin a business. This process of obtaining a license varies from country to country, state to state, etc. In this blog, I have discussed the process of obtaining trade license.
Necessity of Trade License
One need to get trade license as it is mandatory in law. It is very similar to driving license. If one is caught driving a car without any license he will be penalized for the same. Similarly if one is conducting a business without any trade license that person’s business would be considered illegal and he might have to pay heavy penalty depending upon the nature and duration of the business. The government has made it necessary for one to get trade license to ensure that one is not carrying out unethical business practices and is following relevant rules, safety measures and guidelines. The requirement for trade license was made compulsory to ensure that the government can regulate various trade activities in the country.
Businesses for which Trade License is Necessary
Trade licenses are necessary for three kinds of business. These types are as follows-
- All the eating establishments like hotels, restaurants, canteen, food stall, bakeries, sale of vegetables, meat, provisions store, etc.
- Trades which use motives like manufacturing industries, factories, power looms, flour mills, cyber café, etc.
- Offensive and dangerous trades like barber shop, dhobi shop, timber wood, sale of fire wood, candle manufacturer, cracker manufacturer, etc.
These three types of trade have covered almost all the business and service activities. Thus, for every legal business or service activity, one needs to obtain trade license.
Some Legal Technicality of Trade License
This trade license has to be obtained within 30 days of commencement of the business in some states like Bombay, Uttar Pradesh,Karnatka, etc. It normally takes 8 days to obtain a trade license, however, if the documents are incorrect or incomplete it might take more than 8 days.
If an individual violates the condition of license or cause nuisance in the neighborhood or surrounding then the license might be canceled or revoked. The renewal period of issuing a license is 1st January to 31st March every year.
Rules and Regulation under the Act
Trade license is obtained under Shop and Establishment Act. The Acts regulates following rules and working conditions-
- The Act specifies the permissible working hours per day and per week.
- Along with fixed working hour the act also specifies the rest intervals, opening and closing hours, holidays, overtime policies, closed days, spread over of work, etc.
- The Act also specifies the regulation for the employment of young people and women.
- It also specifies the rules and regulations for paid leaves like maternity leave, sick leave, etc.
- It also regulates the conditions for employment and termination.
- It states the requirement of maintaining registers and records and necessity of displaying notices.
- It also specifies the obligation and responsibility of employers and employee towards each other, to the firm and to the society.
The process of obtaining, maintaining or terminating the trade license is very simple. However the procedure varies from state to state. Following is the general procedure to which few more formalities needs to be added depending upon the state rules.
Commencement of Business:
To get a Registration Certificate one needs to file an application along with fees details and needs to send to an Inspector (Chief Inspector of Shops or any other Inspector under the Act) for inspection. The details should also include:
- Name of the business or service center, owner, managers, if any;
- Address along with pin code of the Business or Service Center, where posts can be mailed;
- Any other specifics as may be recommended.
The certificate of registration will be issued once the Inspector has verified the statements. He will register the establishment in the ‘Register of Establishments’. After receiving the certificate one needs to conspicuously display the certificate at the establishment and have to be cautious about the renewal policy.
Amendment to Certificate
Any amendment or change that has to be made in the certificate should be communicated to the official within 15 days of the occurring of the change. The Inspector would issue a new certificate with the change afterward.
Closure of the Business
In case one has closed their business, the same has to be communicated to the officer within 15 days of the closure date. The officer would record the updates in the ‘Register of Establishments’.
In this section I have mentioned links for online registration in few of the cities of India.
- http://www.mcgm.gov.in/irj/portal/anonymous/qlshopestab (Registration Forms)
- http://www.sharpfacility.com/Labour%20Laws/General/BARE%20ACT/Shop%20and%20Establishment.pdf (Bombay Shops and Establishments Act, 1948)
- http://18.104.22.168/fledmc/ (Registration of manufacturing and factory units)
- http://22.214.171.124/csbedmc/htl/htlregistration.php (Registration manufacturing and storing for license of Food products and medicine)
- http://126.96.36.199/csbedmc/htl/htlregistration.php (Registration for services regarding health, entertainment or food)
- http://188.8.131.52/csbedmc/gtl/online_gtlregistration.php (Registration for wholesale and retail shops)
- http://www.delhi.gov.in/wps/wcm/connect/doit_labour/Labour/Home/Acts+Implemented/Details+of+the+Acts+Implemented/The+Delhi+Shops+Act%2C+1954/ (The Delhi Shops Act, 1954)
- https://view.officeapps.live.com/op/view.aspx?src=http%3A%2F%2Fwww.hrindya.com%2Fwp-content%2Fuploads%2F2010%2F10%2FAndhra-Pradesh-Shops-Establishment-Act-1988.doc (Andhra Pradesh Shops& Establishment Act, 1988)
- http://cdma.ap.gov.in/TradeLicenses.html (rules and regulation for registration)
- https://www.kmcgov.in/KMCPortal/jsp/KMCTradeLicenseHome.jsp (Rules and regulations)
- http://www.commonlii.org/in/legis/wb/act/wbsaea1963359.pdf (The West Bengal Shops and Establishments Act, 1963)
- http://www.chennaicorporation.gov.in/rules-procedures/tradeLicence.htm (Rules and procedure)
- http://nics.in/wp-content/uploads/2014/03/TN-Shop-act.pdf (Tamil Nadu Shops and Establishments Act, 1947)
Concluding this blog, I would like to state that trade license is an essential requirement for commencing a business legally. Government of India has made this process easier by facilitating online registration. It is a very simple process however it seems complicated as all the states have their own rules and regulation for trade licensing.
- Shops and Establishments – What the Law Says:, http://www.quickbooks.in/r/legal/shops-establishments-%E2%80%93-law-says/ (last seen on 15th July, 2016)
- http://ranchimunicipal.com/tl_faq.aspx (last seen on 15th July, 2016)
- Fraser Sherman, http://smallbusiness.chron.com/difference-business-license-registering-business-41322.html (last seen on 15th July, 2016)
- How to get or Apply for Business or Trade License in India, Delhi? http://www.mastbusiness.com/bizguides/bg552/ (last seen on 15th July, 2016)
- Picture Credit: http://ceformation.co.in/trade-license/
Shruti Agrawal (Jindal Global Law School, 4th year)
Necessity of Trade License , trade license , shop and establishment act , Businesses for which Trade License is Necessary , Some Legal Technicality of Trade License , Rules and Regulation under the Act , General Procedure , Online Registration , Amendment to Certificate , Closure of the Business , Commencement of Business , mumbai , delhi , hyderabad , kolkata , chennai , banglore