Why Do We Need License? Trade License- Use, Categories, Importance And Procedure To Get Trade License.

Why do we need a license?


We all know that license is required to do business. But why we need any license including trade license?

License is required for three purposes.

  1. Identify your Business. It is to make sure that you are doing a legal business applicable by law.
  2. Accountability: To make sure that you are accountable for your business. If anything goes wrong or if any illegal activities are carried out the owner of the business will be held responsible for these illegal activities.
  3. To Protech Public Health and Safety. Government agencies ensure that your business activities do not hamper public health and safety.
  4. To keep track of your finances for tax purposes.


What is the use of a license?

A license is an official permission to carry out business or trade or any activities.


What is a Trade License?


It is issued with standards, safety guidelines, and relevant laws to ensure how business is being done and to protect the community within the state.

This is monitored and issued by the State Government for regulating trade and business within the city.



  • Industrial License
  • Shop License
  • Food & Shop Establishment License


Important for Trade License

  • To ensure that the customers shall not adversely be affected by the health issues due to improper trade of business.
  • It maintains higher goodwill.
  • To attract more and more customer base and investor organization.
  • It ensures that the business practices are being carried reasonably and by following the prescribed rules and regulations.


Why we need a trade license?

Your Trade License gives you the right to carry out various activities. It is a legal document to a company.




The fee you pay for trade license is determined by the Municipality or Panchayat under whose jurisdiction you carry out the business. The state government can interfere and may decide the fees for trade.


Criteria for fixing the fee

The following factor influence the fee

  1.  Nature of Trade
  2. Nature of company. Like Public Limited or Private Limited or LLP or Proprietorship company
  3. Area Covered for business activities. More area covered more the fees.
  4. Annual Turnover of the company


Can we run a business without a trade license?


The purpose of a trade license is to regulate and control health hazards and nuisance due to improper carrying out of business/trade.

It is compulsory for preparing and trade on food-related items like hotels, restaurants, food stalls, bakeries, selling meat and/or vegetables, industries having canteens, cyber cafes, businesses like a barbershop, dhobi shop, etc.

It is compulsory in law. Doing trade/business without it is an offence in India.

Failure to obtain one can result in fines, imprisonment, and even death if you resist arrest.

It is always to take legal opinion before indulging in a trade/business.


How to get a Trade License in Kolkata Municipality Corporation(KMC)


The procedure of obtaining trade License in KMC.

  1.  An application in the prescribed form under section 199 of the KMC Act.
  2. Place of business :
    1.  If owned by petitioner tax bill to be produced
    2. If tenant, rent agreement to be produced
    3. When applied by lessee, lease-deed to be produced
    4. If relative/person granted rent-free accommodation, consent letter by the owner to be submitted
    5. License official may issue it on the spot if any trade/business is carried out without obtaining the license.
  3. In the case of Public Limited/Private Limited Company/ Limited Liability Partnership Company following documents to be submitted along with the application.
    1. Memorandum/Article of Association
    2. Declaration in Form No. 32
    3. Form 18
    4. Proof of Occupancy
    5. Certificate of Registration
    6. List of Directors with address
  4. For Partnership Firm, a Partnership agreement is to be submitted along with the application for a trade license.



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