start an online store in India

Looking to Start an Online Store in India? Legal Requirements and Compliances to Know

April 14, 2022

Willing to start an online store in India? There can’t be a better time to start your eCommerce store venture. The transformation of the digital sector is on-rise in current times, which has motivated hundreds of young entrepreneurs to establish their own eCommerce businesses. 

Despite having high aspirations, many entrepreneurs do not feel confident about opening their online stores due to the lack of knowledge of establishing an online store business. 

That is why we did in-depth research on this topic and decided to provide you with all the information you need to know about India’s eCommerce laws and how to start online store in India. So let us begin!

How to Structure an Online Business in India?

As per the Information Technology Act of 2000, whose rules keep frequently changing with the latest technological trends, to start an online store in India, you need to create a company or partner with a company through the following means:

  • Sole Proprietorship
  • Partnership
  • Limited Liability Partnership (LLP)
  • Private or Public Company 
  • Single Person Company

The most common way people generally choose to commence their business is by building a private company or incorporating it with an established marketplace.

Building a Private Company

The entire process to build your company from scratch can be accessed through the official government portal. The basic process starts by registering the company’s name along with the owner’s name of the company. There must be at least 2 directors with DSCs (Director Status Codes) and DINs (Director Identification Numbers). 

The corporation must show an authorized capital investment of at least INR 1 lakh. After that, the Articles of Association (AOA) and The Memorandum of Association (MOA) needed to be filled, following which the Registrar of Companies will issue a certificate of incorporation to the company at the registered address of the office.

Also Read: The only eCommerce Checklist you need to Start an Online Store

Legal Formalities Required to Commence an eCommerce Business

The following things must be fulfilled to start an online store in India: 

  • Registering the Domain Name

A domain name must be registered for the company that is not already present on the web. You can register the name with the Trademark Registry and acquire rights for the registered domain name. 

  • Protecting the Data

India’s eCommerce laws say that every customer has a right to privacy of their data, and the company cannot mismanage someone’s personal data. Companies usually get the details of customers’ personal and confidential data when they purchase through their portals. 

Hence, the company must abide by data privacy and data security rules and ensure that customers’ private details such as bank account numbers, credit card details, and any other sensitive personal data should be protected by the company at all times.  

The company must ask for the customer’s permission before using their data. They must be made aware of the purpose of the data that is being collected, and the data cannot be shared with any third party without user consent. 

  • Payment Gateways

Another significant factor in establishing an eCommerce startup is to have an authorized payment gateway to process customer payments. The payment portal must accept debit cards, credit cards, net banking, internet banking payments, UPIs, etc. The payment gateway acts as a mediator to transfer the money from the customer to the business account. 

  • Terms of Service & Privacy Policy 

Privacy policy and terms of service are the two most relevant documents for a private eCommerce company in India. The terms and conditions inform customers about their rights and obligations when dealing with the company. It is made for the legal protection of the consumers so that they can not be cheated. 

On the other hand, the privacy policy informs customers about how eCommerce firms may use customer information and how they will protect their personal information. These documents are prosecuted under the Information Technology Act of 2000 (section 43A). 

  • Supplier Agreement

All the online stores must provide a supplier/vendor agreement with the other party their business is involved with. The agreement must state each party’s status & obligations. It should also mention what would happen in case of default, product quality, payment, late delivery, etc., so that legal action can be taken against the violator if needed. 

  • GST Requirements

GST registration is mandatory to start an online store in India. There are various threshold limits set by Indian law as per which the company must pay the calculated GST to the government. 

  • Other Requirements

Other than these, various other contract laws, labor rules, and other Indian Penal Code laws must be fulfilled to run your online store legally. Many states have also made it compulsory to acquire a shop and establishment license to start a company. In all, there are various legal requirements for eCom businesses that may vary depending upon the kind of company you are expecting to make. 

Incorporating with an Established Marketplace or Creating Your Store

If you are all confused with the above-given way of how to start online store in India, there is also another easier route. You can join an already established marketplace such as Amazon, Flipkart, etc., to start your online store. 

The process to join these eCommerce marketplaces is extremely simple. You only need a bank account and a GST registration of your company through which you can join these platforms. These platforms themselves take care of the numerous other eCommerce aspects such as technology development, payment gateway, marketing, logistics, etc. t significantly reduces the workload of the sellers as all the complex duties are performed by these platforms. In addition, sellers can also benefit from joining multiple marketplaces and thriving their business at a higher pace. 

Or where as, with an eCommerce platform like Quick eSelling, you can create your own online store and set up your own custom domain. Quick eSelling allow to create an ecommerce website with mobile app without any kind of fees. It is only free eCommerce platform that come up with zero monthly fees & commission charges.

Read More: How Quick eSelling Stacks up against other FREE eCommerce platform like Shopify or Square?

Final Thoughts

Starting an online store in India is an extremely challenging task. Forget about your business strategies, starting the store itself is an excruciating process. That is why free eCommerce platforms like Quick eSelling are getting huge demand from young entrepreneurs to commence their online stores. If you, too, are looking for an efficient way to start off your online business in India, consult our expert team and get the required advice to start your online store swiftly.