Every business establishment in India to conduct their business legally has to abide by Indian Government Rules and Regulations. For example, a Trade License and Shop Establishment License are some of the mandatory licenses you need to obtain when starting a business. However, there is a difference between trade license and shop establishment license that you must know.
What is a Trade License?
Trade License is one of the oldest business licenses in India. It is governed by the state government and the local municipal corporation issues it.
The basic purpose of the license is to ensure that no one is harmed in any way by the annoyance and health hazards of any enterprise or industry.
A trade license is a document or certificate that allows an applicant or company owner to establish a certain trade or business in a specific location. It guarantees that the company follows all of the government’s safety regulations. The Trade license, however, does not authorize the licensee to conduct any other trade or activity than that for which it was given.
Furthermore, the licensee of the trade license does not acquire any type of ownership rights.
Why is a Trade License important?
The government has made trade licenses mandatory to conduct any certain business or trade in a specific location and to guarantee that no one is engaging in unethical business activities.
Thus, Trade License promotes societal peace by ensuring that all businesses follow necessary regulations, norms, and safety precautions.
What is a Shop Establishment License?
The Shop Establishment registration is a state-based registration that is necessary when operating a hotel, shop, or any other commercial premises. This also includes shopping malls, retail outlets, etc.
It is necessary to register any new store or establishment under the Shops and Establishment Act within thirty days of commencement of the business.
Every state has its own set of rules regarding shops and establishments, which must be adhered to. Furthermore, various states have different nomenclature for the shop establishment license.
For example, the different names of Shop Establishment License are:
- Gumasta License in Maharashtra
- e-Karmik License in Karnataka
- Shopex in Delhi
Why is a Shop Establishment License Important?
The Shops and Establishment License regulates numerous aspects of employment, including salaries, work time, rest periods, lunches, breaks, leaves, as well as other work circumstances for employees employed in various locations. The registration is required for each company location, with the exception of those that are already registered by the Factories Act of 1948.
Difference between Trade License and Shop Establishment License
| Trade License | Shop Establishment License |
| It is basic permission from the government to start a particular trade in a particular area. | It is a License or authorization from the government to commence a business and ensure the rights of employees. |
| You cannot obtain a Trade License for home business. | It is mandatory to obtain a shop establishment license in India for home businesses too. |
| A trade license is required to ensure that unethical business practices are not used. A trade license also assures that all government-issued laws and safety recommendations are followed. | The Shops and Establishment Act control working conditions that define employees’ rights in the unorganized sector and lays forth a list of responsibilities for all employers. It is highly suitable for stores or unorganized businesses around India, all gain from it. |
| A trade license is generally mandatory for establishments such as hotels, restaurants, food stalls, computer cafes, and so on. | Every business whether providing goods or services or both needs Shop Establishment License. |
Moreover, If you want any other guidance related to Shop Establishment License, please feel free to talk to our business advisors at 8881-069-069.
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