Seller activity online, like launching a shop on Amazon, Flipkart, and Meesho, is common nowadays. Still, nearly all online sellers in India do not know that online businesses are treated as commercial establishments in some states under the Shops and Establishments Act.
If you are missing just one of these registrations, such as the Shops and Establishments Registration, GST registration, or a product-specific license, you may face penalties and also your business operations could be stalled. This article covers when the acquisition of an e-commerce license is obligatory, details of how you can get one, and its cost in India. For comprehensive support with your online business setup, Foxtax offers end-to-end assistance tailored for e-commerce businesses in India.
Do You Need a Licence to Start an E-commerce Business in India?
Yes, you do. An e-commerce business is considered a “shop” or “commercial establishment” in India, and because of this, will need a Shops and Establishments Act licence, provided the location of the business (your office) is in a particular state. Purchasing physical goods via the Internet and selling them without GST, for instance, you will need to take into account various laws, rules, and taxes of the state in which you run your business.
Because of this, there is no single answer to the question. You need a mix of licenses and registrations at the very minimum. Let’s have a take a deep dive into this matter now:
Shops and Establishment Act Registration
This is usually the first registration you need when you come to India and you are looking for an e-commerce license. In short, your online shop will be registered as a commercial establishment under the same law and you must also provide for other things, such as employee wages and working hours as well as safety regulations at a place of work.
The application is submitted online via your state’s labour portal and upon receiving the certificate, it will work as evidence that your company is in fact operating legally. You can explore the detailed trade license requirements for sole proprietorship to understand how this applies to different business structures.
Is GST Compulsory for E-commerce?
Any person who is supplying goods or services through an e-commerce platform is generally required to obtain GST registration irrespective of their sales turnover. This law applies equally to small home business owners and large sellers. Also, e-commerce operators are required to follow the rules under Tax Collected at Source (TCS) provisions. GST registration on both sides of the transaction is mandatory. To understand the complete process, you can refer to this detailed guide on GST registration in India.
FSSAI Licence and BIS Certification for Specific Products
In case you are an online business and you offer food items, you need an FSSAI registration whether you are big or small, or you have no turnover at all. In fact, many online eateries must apply for a central FSSAI licence anyway. In the same way, the sellers trading in toys, electronics, smart devices, and other regulated products should be BIS certified and have the applicable ISI mark before showcasing products.
Can I Run an E Commerce Business from Home?
Starting from home is perfectly legal, yet it does not mean that you do not need to comply with any licensing requirements. You can use a residential address for registration under the Shops and Establishments Act registration in most states, whereas some municipal corporations may also require an occupancy certificate or an NOC from the building owner. For GST registration and product-specific certificates, you are treated like any other commercial establishment.
How to Get an E Commerce License in India
Here is the way to complete your e-commerce registration with the least delay due to bureaucratic procedures:
1. Choose Your Legal Structure
Decide on your business legal structure. Select the legal form of your business from a sole proprietorship, general partnership, LLP, private limited company, etc. Starting a business as a sole proprietorship is simpler, while an LLP or private limited structure provides the advantage of limited liability and also gains credibility marketplaces and investors.
2. Register Under the Shops and Establishment Act
Complete an online form on your state labour portal and pay the fee of your state, which usually varies between ₹250 – ₹1,500 for different states. The Shops and Establishments license registration is issued within a few days, and that will be the first legal document that you receive for an online shop.
3. Apply for GST Registration
Go to the GST website and apply for registration by providing your PAN, bank account details, and the office or shop address where your business is located and so on. No government fee is required for a GST registration. You can begin using your GSTIN immediately for marketplace seller accounts, your bank account, and tax invoices once it is issued.
4. Obtain Product-Specific Certifications
Make sure to figure out any certifications your products legally need to have, such as FSSAI or BIS licence. Then proceed to apply on the relevant agency website and wait for the certificates to arrive in your inbox before commencing product sales from there. Holding these papers is a prerequisite for getting your products approved and listed by online retailers like Amazon, Flipkart, etc.
E Commerce License Cost in India
The cost difference may arise from the type of the business and product in question more than from the marketplace joined. Here is a table with costs in rupees only, that will help you understand the approximate cost of licenses:
| Licence or Registration | Government Cost in India | Applicability |
| Shops and Establishments registration | ₹250 – ₹1,500 per state | All businesses |
| GST registration | No government fee | All sellers in e-commerce marketplaces |
| FSSAI license | ₹2,000 – ₹50,000 based on state and central licence category | E-commerce restaurants and food businesses |
| BIS certification | Around ₹25,000 and above, excluding testing charges | Electronics and toy manufacturers and other regulated products |
| Incorporation of an LLP or private limited company | Government and professional fees included total up to ₹4,000 – ₹15,000 | All that want a formal company formation |
Final Checklist to Secure Your E Commerce License in India
Have these points as your guide when making an e-commerce licence documentation:
- Register under your state’s Shops and Establishments Act first. It is advisable not to delay your registration for too long.
- If turnover is below ₹20 lakh, you cannot claim the GST registration exemption as it is a legal requirement to have a GSTIN if you are selling through a marketplace platform.
- Make sure the products you are going to sell have mandatory certifications such as FSSAI, BIS, or others.
- Display your registration numbers and GSTIN on your website visibly and also on the marketplace seller profiles in a very clear manner.
- Make a plan for annual renewals and return submissions to avoid the situation where your licences get lapsed.
Once your registrations are sorted, you can actually look forward to selling online without worrying much. Foxtax supports Indian entrepreneurs by providing help to get the GST registration, company incorporation, and comprehensive e-commerce compliance solutions, so that the idea of the launching of your online store will not get you bogged down with the paperwork. You can also explore our guide on e-commerce registration in India for additional insights.
The right licenses should be acquired at the start of the business and then you don’t have to worry about all the legal stuff and also be free to scale the operations of your business as you please. For professional assistance with your entire compliance journey, consider exploring our business registration services and GST compliance resources.
Frequently Asked Questions About E Commerce License in India
Can I sell online without GST?
It is not allowed for online sellers selling products to be online sellers without registering for GST if they do the selling via e-commerce platforms or operators. GST law states that such registration is mandatory for sellers without any turnover threshold. If registration is not done, it is a violation of laws. The seller can be penalized, marketplace listings can be blocked, and denial of input tax credit may follow.
What are the 7 types of e-commerce?
These are the seven types of e-commerce that are commonly known, namely, B2B (business to business), B2C (business to consumer), C2B (consumer to business), C2C (consumer to consumer), B2G (business to government), G2C (government to consumer), and m-commerce (mobile commerce). At the point of licensing, your business model will be less decisive than the products you are going to sell and the platform you choose.
Is company registration compulsory to sell online?
Selling online via a registered company is not compulsory. Yet, you can start as a sole proprietor and register under the Shops and Establishments Act and GST in addition. If a person incorporates as an LLP or a private company, then they will be in a position to raise funds, protect their own assets, and get into larger business contracts. You can also check this guide on GST for e-commerce sellers to understand the specific compliance needs for marketplace selling.
What happens if you sell online without a licence?
Sellers without proper documents will have to pay penalties under the Shops and Establishments Act, GST Act, and other area-specific sectoral laws, depending on which category your product belongs to. On top of that, sellers will also risk losing business accounts with marketplaces whenever document verification fails. To stay out of trouble, better make necessary documents before even making the first sale. For a complete overview of what your online venture requires, visit our e-commerce business services page and get started on the right foot.