Rise in Trade Licence Fees for Businesses
In a recent move, the Greater Chennai Corporation (GCC) has decided to increase the trade licence fee for commercial establishments by a significant 150%. The new rates will see the maximum annual fee rise from ₹10,000 to ₹25,000, placing an additional financial burden on business owners, particularly those operating on a smaller scale. Smaller shops will experience a minimum increase of 50% in their fees, further affecting their operating costs.
Changes in the Licence Renewal Period
Along with the hike in fees, the Corporation has also altered the licence renewal process. Previously, the trade licence was valid for one year, requiring annual renewals. However, under the new resolution passed by the Chennai Corporation Council, the licence will now be issued for a period of three years. This change means that businesses will no longer need to renew their licences every year but will have to pay for a three-year term upfront.
Government Initiatives and the Need for Digital Solutions
The Indian government has introduced provisions like Section 43B(h) of the Finance Act, 2023, aimed at ensuring timely payments to MSMEs. While these initiatives are well-intentioned, they sometimes create challenges for MSMEs in securing business from third parties. To address the credit gap and overcome these challenges, a more proactive approach from the government is required. Additionally, leveraging advanced digital solutions can play a crucial role in bridging the credit gap, making financial resources more accessible to MSMEs.
Impact on Business Owners
For businesses paying the maximum trade licence fee of ₹10,000 annually, this change translates into a substantial increase in their financial commitment. Under the new structure, these business owners will be required to pay ₹75,000 for the next renewal period, covering the three-year term instead of the previous ₹10,000 annual fee. This marks a significant rise in their overall financial burden, especially for small and medium-sized enterprises (SMEs) operating on tight margins.
