An e-commerce business involves selling products or services online through your own website or platforms like Amazon and Flipkart. To start one in India, first decide on your business type and register your business. Options include sole proprietorship, LLP, or a private limited company. You must obtain GST registration, open a current account, and comply with MSME and data protection regulations. Next, choose how to sell—via your own website or through online marketplaces. Set up logistics and inventory, integrate payment gateways, and publish legal policies. Promote your business through SEO, social media, and paid ads. Lastly, stay compliant with GST filings, TCS reconciliation, and annual company returns.
In this blog, we will explain what an e-commerce business is in India and how to set up such a business in India.
What is an E-Commerce Business?
An e-commerce business refers to any commercial activity where buying and selling of goods or services takes place over the internet. Unlike traditional businesses that rely on physical shops or face-to-face interactions, e-commerce allows businesses to reach customers through websites, mobile apps, or online platforms.
Features of E-Commerce
- Online Presence: The business operates through a digital storefront — either a personal website or a marketplace like Amazon or Flipkart.
- Digital Transactions: All purchases and payments are made electronically using cards, UPI, net banking, or digital wallets.
- Remote Delivery: Products are shipped to the buyer’s address, or services are delivered online.
- No Geographical Boundaries: Businesses can reach customers anywhere — locally, nationally, or globally.
Step-by-Step Procedure to Set Up an E-commerce Business in India
Step 1: Decide the Type of E-Commerce Business You Want to Start
Before diving into legalities, decide your business approach:
- Product-Based: Selling physical goods (electronics, clothing, beauty products).
- Service-Based: Online services like consultations, digital downloads, or online tutoring.
- B2C vs B2B: Will you sell directly to customers (B2C) or businesses (B2B)?
- Marketplace vs Own Store: Will you build your own platform, such as selling on Amazon/Flipkart?
Step 2: Choose the Right Business Structure and Register It
You cannot legally run an e-commerce business in India without registering your entity. Choose based on scalability, funding needs, and compliance capacity.
| Entity Type | Registration Authority |
| Sole Proprietorship | Local Municipal Authority |
| Partnership Firm | Registrar of Firms |
| LLP (Limited Liability Partnership) | Ministry of Corporate Affairs (MCA) |
| Private Limited Company | Ministry of Corporate Affairs (MCA) |
Note: A Private Limited Company or LLP is mandatory if you want to raise funding, get corporate buyers, or run B2B marketplaces.
How to Register Your Entity (Online)
For LLP or Private Limited Company:
- Get DSCs (Digital Signature Certificates) for all directors/partners.
- Apply for DIN (Director Identification Number) through SPICe+ on the MCA portal.
- Reserve the company name using Part A of SPICe+.
- File incorporation documents (MOA, AOA, AGILE-Pro, etc.).
- MCA will issue a Certificate of Incorporation (COI), PAN, and TAN.
For Sole Proprietorship:
- Register under the Shop & Establishment Act at your local municipal body.
- Get GST Registration and Udyam Registration, and open a current account.
Step 3: Obtain Mandatory Licenses and Tax Registrations
E-commerce is highly regulated. You need the following licenses:
- GST Registration: Under GST law, e-commerce sellers must obtain a GSTIN regardless of turnover if they sell through platforms like Flipkart or Amazon.
Apply via: https://www.gst.gov.in
Documents Required:
- PAN
- Proof of business place (rent agreement or property papers)
- Business registration certificate
- Bank statement
- Aadhaar and a photo of the proprietor/directors
- UDYAM Registration (For MSMEs): Register on https://udyamregistration.gov.in to avail benefits like subsidies, bank loans, and exemption under some tender conditions.
- Import-Export Code (Optional): If you plan to sell internationally (e.g., through Etsy or your own website), apply for an IEC from the DGFT at https://dgft.gov.in
Step 4: Open a Current Bank Account
Once you have the business registration and GSTIN, open a dedicated current account in your business name. This ensures clean financial records for audits, taxation, and investor scrutiny.
Required Documents:
- Certificate of Incorporation or MSME Certificate
- GSTIN
- PAN of the entity
- Address proof
- KYC of the promoters
Step 5: Choose Your Selling Platform
- Sell via Your Own Website, the Platform options:
- Shopify India
- WooCommerce with WordPress
- Magento
- Dukaan (for mobile-first sellers)
- Sell on Marketplaces
Steps to Sell on Amazon India:
- Go to https://sellercentral.amazon.in
- Upload KYC documents: PAN, GST, bank account, and address proof
- List your products
- Choose between Fulfilled by Amazon (FBA) or self-fulfillment
- Start receiving orders
Other popular marketplaces:
- Flipkart Seller Hub
- Meesho Supplier Panel
- Snapdeal, Paytm Mall
Each platform requires separate KYC, GSTIN, and bank account details.
Step 6: Set Up Logistics and Inventory Management
In warehousing, you can:
- Store at home (for small sellers)
- Rent a warehouse
- Use 3rd party fulfillment services (FBA, Flipkart Fulfilment)
Courier and Shipping Services, for self-fulfillment:
- Tie up with aggregators like Shiprocket, Pickrr, Delhivery, or Ecom Express
- Offer Cash on Delivery (COD) to increase conversion
For marketplace fulfillment (FBA, Flipkart), they handle storage, packing, and shipping.
Step 7: Payment Gateway Integration
If you operate your own website, integrate secure payment gateways to process online payments. Popular Indian Payment Gateways:
- Razorpay
- Instamojo
- PayU
- CCAvenue
Step 8: Legal Policies and Data Protection Compliance
As per the Information Technology (Intermediary Guidelines and Digital Media Ethics Code), 2021, and Consumer Protection (E-Commerce) Rules, 2020, e-commerce businesses must:
- Publish Terms & Conditions, Refund Policy, and Privacy Policy
- Ensure the customer grievance redressal mechanism
- Appoint a nodal contact person (if applicable)
If you handle personal data, ensure basic compliance with the IT Act, 2000, and the upcoming Digital Personal Data Protection Act, 2023.
Step 9: Launch and Market Your Brand
Digital Marketing Essentials:
- SEO: Optimize product pages for Google
- Social Media: Run campaigns on Instagram, Facebook
- Google Ads & Meta Ads: For instant visibility
- Email Marketing: Tools like Mailchimp for promotions
Step 10: Compliance & Maintenance
- Monthly GSTR-1 and GSTR-3B
- Annual GSTR-9 (if applicable)
- Reconcile the TCS collected by Amazon/Flipkart
TCS under Section 52
If you sell on marketplaces, Amazon and Flipkart deduct 1% TCS from your settlement. This must be reconciled during GST filing.
Annual Filings (for Companies/LLPs)
- File AOC-4 (financials) and MGT-7 (annual return) with MCA.
- Maintain proper accounts and get your books audited if turnover exceeds ₹1 crore (₹10 crore for digital receipts/payments only).
Conclusion
Starting an e-commerce business in India is a practical and rewarding path for entrepreneurs. With the proper planning, legal setup, and digital presence, anyone can turn a simple idea into a scalable venture. While the process involves several formal steps from registrations to logistics, it becomes smoother when approached one stage at a time. As the digital economy continues to expand, proactive, legally compliant, and customer-focused businesses will see long-term growth and sustainability.
