What are the licensing requirements for e-commerce in India? In a rapidly growing digital marketplace, online businesses must fulfil the licensing requirements for e-commerce in India to avoid hefty fines, penalties and closures. Obtaining necessary licences and permits ensures secure financial transactions, taxation benefits and legal protection and also builds the credibility of the company while enhancing consumer trust.

In many e-commerce businesses, it is mandatory to have a requisite licence or permit without which they can not set up their business in India. For example, FSSAI Registration for food products to ensure public safety and health standards, Import Export Code (IEC) for businesses involved in importing and exporting goods. Obtaining the necessary licence or permit involves the fulfilment of certain legal requirements in a systematic manner starting from identifying the mandated licence for the business, gathering updated documents and submitting to relevant government agencies. 

 

I. Business Registration

An appropriate business structure has an impact on the company’s daily operations, liabilities and tax payments. Each type of structure has its own pros and cons but choosing the right structure that fulfils your business goals, scale and risk tolerance is important. Once the right business structure is decided, it is time to register your e-commerce business with the Ministry of Corporate Affairs (MCA). Following is the legal compliance for such registration with MCA: 

  • An application for reservation of the name of the company shall be filed online through the Ministry of Corporate Affairs (MCA) portal using the Reserve Unique Name (RUN) web tool. The name shall be unique, easy to pronounce and not resemble the name of any already registered company and the availability of the name can be checked through the MCA portal. 
  • Next step is to obtain a Director Identification Number (DIN) enabling MCA to track and manage information related to an individual’s role as a director.
  • All proposed directors need to obtain a Digital Signature Certificate (DSC) for electronic submission of the documents. 
  • Draft necessary documents such as Memorandum of Association, Articles of Association and upload them along with identity proof, address proof of the registered office declarations etc. 
  • Pay the necessary government fee and stamp duty. 
  • The Registrar of Companies (RoC) will verify the documents and upon successful verification will issue the Certificate of Incorporation (CoI). 

Related:  Step-by-Step Guide to E-commerce Registration in India

 

II. GST Registration 

Understanding the complexity of GST registration for e-commerce in India is a crucial step for businesses looking to minimise compliance risks and maximise tax planning in this ever-evolving digital marketplace. GST replaces several indirect taxes with a single tax structure and helps to simplify the process of paying taxes for e-commerce businesses along with a uniform tax return filing system through the GST portal which eases the filing of returns online.

Following is the step-by-step process for obtaining a Goods and Services Tax Identification Number (GSTIN):

  • It is mandatory to have a valid GST registration number for businesses with a yearly turnover of Rs. 40 lakh (for goods) and Rs. 20 lakh (for services) and of Rs. 10 lakh in special category states. 
  • To start the registration process, visit the GST portal and select ‘New registration’ and fill out the required details which shall be verified through OTP sent on your mobile.
  • After verification, A 15-digit Temporary Reference Number (TRN) will be generated which will be used to complete Part A of the registration process.
  • Submit the application along with uploading necessary documents like PAN card, address proof of business, bank account details, and incorporation Certificate among others.
  • Upon verification of the authenticity of the details by a GST officer, a 15-digit GSTIN and a registration certificate will be issued.

 

III. MSME Registration  

The Government of India has come up with the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 which offers various benefits and incentives to MSMEs that register under this Act. Key advantages of MSME registration includes collateral free loans, tax exemption, rebates, ensuring timely payment by buyers, subsidies and concessions on buying of plant and machinery and 50% subsidy on total cost of patent registration.

It is not mandatory for e-commerce MSMEs to register themselves but doing so makes them accessible to any benefits and schemes that the government launches for their welfare. For registering your entity as MSME, following licensing requirements need to be followed: 

  • First ensure that your business comes within the definition of MSME based on the investment and turnover per year. 
  • And if yes, visit Udyam Registration Portal and get your aadhar verified through a registered mobile number linked with aadhar.
  • Fill the required application form declaring your business category and upload necessary documents like Aadhar card, Bank details, PAN card, proof of business address etc. and submit it on the portal.
  • The application is then verified and a Udyam Registration Number (URN) is generated and the Udyam registration certificate will be issued. This certificate is valid for the lifetime of the business and does not need a renewal. 

 

IV. FSSAI License

With the rise of e-commerce businesses dealing with food and food products, the Food Safety and Standards Authority of India (FSSAI) made it compulsory for all e-commerce food companies to obtain FSSAI licence for e-commerce in India, irrespective of their turnover. All e-commerce Food Business Operators (FBOs) must obtain FSSAI licence for the entire supply chain including manufacturers, suppliers, delivery agents, vendors etc. to maintain the basic hygiene and quality standards of the food products and services. 

For obtaining an online FSSAI licence for e-commerce in India:

  • Firstly visit the FSSAI Food Licensing & Registration System (FLRS) portal and login with the help of username and password after registering on the website. 
  • Click on the ‘Apply/Licence Registration’ tab and fill out the application form and necessary details.
  • Upload all the updated and required  documents which include Identity proof, address proof of the business, product list etc. among others 
  • Payment of the application fee is the next step which depends upon the type of licence and its duration.
  • The FSSAI authorities will verify the application form and inspect the office premises if required and if they are satisfied, the licence will be issued which can be downloaded from the FSSAI portal.

 

V. Import Export Code (IEC) 

An Import-Export Code (IEC) is a 10-digit identification number that is required by businesses that are willing to expand their business globally. An IEC helps e-commerce businesses to facilitate international trade and expand the digital marketplace. 

Following is the procedure to obtain an IEC licence:

  • Visit the official website of the Directorate General of Foreign Trade (DGFT) and register yourself by creating an account on the ‘Apply for IEC’ option on the page
  • After registering on the DGFT website, login to the website by entering your username and password. 
  • Once logged in, click on the ‘Apply for IEC’ option and fill the IEC application form by entering the required details like bank information, details of applicant and business details. Along with the application form, upload the necessary documents like PAN card, Address proof, Identity proof, Digital Signature Certificate (DSC) and bank details. 
  • Pay the requisite application fee and submit the application.
  • In case of any error while verifying, the applicant will be asked to correct the error and re-submit. If all the information is accurate, the IEC code and an IEC certificate will be generated and sent to the registered email ID.

 

VI. Shop and Establishment License

The Shops and Establishment Act e-commerce in India mandates to obtain a licence within 30 days of the commencement of business. A Shop and Establishment licence is essential for e-commerce businesses to ensure compliance with state labour laws regarding opening and closing hours, payment of wages, record of employees, annual leave, enforcement and inspection. 

The Shops and Establishment Act e-commerce in India is different in every state having its own procedure for obtaining the Shop and Establishment registration certificate. The following are the licensing requirements for obtaining Shop and Establishment Registration Certificate: 

  • It can be obtained online via logging into the respective State Labour Department website and filing the application form and uploading necessary and updated documents along with the requisite application fee. 
  • The certificate can be obtained offline as well by filling the registration application to the Chief Inspector of the concerned area along with the necessary fees.
  • After verifying the inspector shall issue the registration certificate. The validity and fee of the Shop and Establishment Licence vary from state to state and can be renewed before the expiry of the period of registration. 

 

Conclusion

It can be concluded that e-commerce businesses must comply with various licences and permits to operate legally and smoothly in the digital marketplace. Compliance with the licensing requirements of e-commerce in India ensures legal security, operational stability and saves from hefty fines or shutdowns. Due to ongoing online frauds, fulfilling necessary licensing requirements for e-commerce in India business builds consumer and investor interests alongside the expansion of the market. Each licence has its own registration process that needs to be fulfilled to avail its benefits and incentives and make it legally sound. 

Secure Your E-commerce Success with MAHESHWARI & CO.

Contact MAHESHWARI & CO. today for expert guidance on navigating legal compliance for e-commerce in India in India. Our experienced legal team ensures full compliance, helping you avoid fines and build trust with your customers. Let us handle the legal intricacies, allowing you to focus on expanding your business. 

 

FAQs

1. What are the mandatory licences required for an e-commerce business in India?

The entity must fulfil necessary licensing requirements for e-commerce in India to save themselves from penalties or hefty fines. Ensuring legal compliance for e-commerce in India shall have valid Goods and Service Tax (GST) registration, trade licence, shop and establishment licence to ensure compliance with state labour laws, FSSAI licence in case of food or food products, Import Export Code for business involved in importing or exporting goods or any specific permit related to the products being sold. 

2. How can I apply for a GST registration for my online store?

GST registration for e-commerce in India is a step-by-step procedure starting from visiting the official GST portal and registering yourself after filling the requisite details. Upon verification a Temporary Reference Number (TRN) will be generated which will be used to fill Part A and Part B of the registration. Next step is to upload the required documents. Upon verification of the authenticity of the details and documents by a GST officer, a 15-digit Goods and Services Tax Identification Number (GSTIN) and a registration certificate will be issued.

3. Do I need an FSSAI licence if I sell packaged food products online?

An FSSAI licence for e-commerce in India is mandatory as it ensures that the food products are safe for consumption and meet quality standards.  Under the Food Safety and Standard Act, 2006 (FSS Act), e-commerce businesses cannot deal in any type of food product without an FSSAI licence. All e-commerce Food Business Operators (FBOs), including sellers, brand owners, manufacturers etc. involved in selling pre-packed food to the customers, are required to display the expiry date or batch number, MRP, FSSAI licence number along with hygiene grading by FSSAI and image of the food product that is offered for sale. 

4. What is the process to obtain an Import Export Code (IEC)?

An Import-Export Code (IEC) is necessary for conducting any import or export business in the country, especially for e-commerce businesses that have an online marketplace. To obtain an IEC visit the official website of the Directorate General of Foreign Trade (DGFT) and fill out the application form under ‘Apply for IEC’ and submit all the required documents like PAN card, Address proof, Identity proof, DSC and bank certificate along with Payment of necessary filing fee. Once all the documents are verified and approved by DGFT, it shall issue an IEC code.

5. What are the legal requirements for integrating a payment gateway on e-commerce sites? 

Using a payment gateway, e-commerce businesses can facilitate faster checkout processes. It is a safe intermediary connecting the customer’s bank account with the merchant’s. Integrating a payment gateway on e-commerce sites requires legal compliance with various laws and regulations which includes assured adherence to consumer protection laws, local financial regulations, third-party agreements, anti-fraud measures, data protection etc.