What is a trade certificate?

A trade certificate obtained from the registering authority allows a dealer to receive exemption from registering the motor vehicle owned by him or her although the dealer cannot sell a motor vehicle to another purchaser without the vehicle’s temporary or permanent registration. A trade certificate issued by the registering authority is valid only for a period of 12 months from the date it is issued.

Restriction on the Usage of Trade Certificate or the Trade Registration Mark and Number

A trade certificate or the trade registration mark and number can only be used by the person under whose name it has been issued. Only in certain special circumstances can it be used by any other person. These circumstances are:

  1. If the person driving the vehicle is working under the authority of the person to whom the trade certificate has been issued. This has to be verified by a bonafide document.
  2. If the person driving the vehicle is doing so on behalf of the folder of a trade certificate.
  3. If the person driving the vehicle is doing so as a prospective buyer willing to purchase the vehicle from the person to whom the trade certificate has been issued.

Conditions under which a Motor Vehicle with a Trade Certificate can be Used

The different circumstances under which a motor vehicle with trade certificate can be used are:

  1. If the holder of the trade certificate or another person on behalf of the holder is driving the motor vehicle for the purpose of a test.
  2. If the holder of the trade certificate or another person on behalf of the holder is driving the motor vehicle for its construction or repair.
  3. If the holder of the trade certificate or another person on behalf of the holder is driving the motor vehicle to make the sale to a prospective purchaser and/or is returning from the same place.
  4. If the holder of the trade certificate or another person on behalf of the holder is driving the motor vehicle to make the delivery to the purchaser.
  5. If the holder of the trade certificate or another person on behalf of the holder is driving the motor vehicle to the workshop for fitting a part it or its repair.
  6. If the holder of the trade certificate or another person on behalf of the holder is driving the motor vehicle from the airport or the railway station after its delivery to the location.
  7. If the holder of the trade certificate or another person on behalf of the holder is driving the motor vehicle to or from an exhibition of motor vehicle from where it is to be propositioned for a sale.
  8. If the holder of the trade certificate or another person on behalf of the holder is driving the motor vehicle for the purpose of return to the financier due to a fault on the part of the party of the financier.

Procedure to Apply for a Trade Certificate

The procedure to apply for a trade certificate is as follows:

  1. The applicant has to apply for a trade certificate via the Form 16.
  2. Next, the charge levied for issuance of the trade certificate has to be paid by the applicant to the registering authority. The fee is to be paid as per Rule 81 written under the Central Motor Vehicles Act 1989.
  3. If the vehicle belongs to any of the categories mentioned below, a separate application has to be made:
    • motorcycle
    • invalid carriage
    • light motor vehicle
    • medium passenger motor vehicle
    • medium goods vehicle
    • heavy passenger motor vehicle
    • heavy goods vehicle
    • any other motor vehicle of a specified description

Documents Required for Trade Certificate

The only document required for the applicant to submit to the registering authority is Form 16.

Trade certificate FAQs

  1. Are trade certificate applications the same for all motor vehicles?

    No, the applications for trade certificate renewal or grant is different for different motor vehicles. Separate applications are required for the following vehicles: motorcycle, light motor vehicle, invalid carriage, medium passenger motor vehicle, heavy passenger motor vehicle, medium goods vehicle, heavy goods vehicle, or any other motor vehicle of a specific description.

  2. What are the documents required to obtain a trade certificate?

    The documents required to get a trade certificate are the following: Form 16, which is application of trade, dealership letter from the manufacturer, map of workplace, trade owner’s PAN number, GST number of business or firm, valid address proof such as Aadhaar or voter ID, photographs of workplace, documents of workplace, etc.

  3. What happens after you make the application for trade certificate?

    After the application is submitted for a trade certificate, the regional inspector or other officer will visit the workplace for an inspection to see if it meets the requirements. If it is successful, you will have to pay the fee for the relevant class of vehicle after which you will be issued the trade certificate on Form 17 which is valid for one year from the date of issue.

  4. Why is the trade certificate important?

    A trade certificate issued by the RTO is very important because it is a certificate of bonafide business and is mandatory as per the Motor Vehicles Act. This is to be displayed on the vehicle when it is not registered.

  5. What are the purposes for which a trade certificate may be used?

    A trade certificate may be used for the following purposes: proceeding to or returning from a weigh bridge, proceeding to or returning from a workshop for fitting a body to the vehicle or for painting and repairs, for proceeding to or returning from an airport, wharf, or railway station after being transported or for transportation, for proceeding to or returning from an exhibition of vehicles where it is being offered for sale, for trial or demonstration for a prospective buyer, as well as some other reasons that are mentioned in the MV Act.

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