written by | October 31, 2022

E-commerce Business Licence: How to Start an Online Business in India?

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Table of Content


Once you've decided to launch an online store and selected one of the top business ventures, you must obtain a licence.

Like a driver's licence, operating an online business in India without one might get you in trouble. Like eCommerce accounting, getting a company licence might seem complicated, but it's much easier than you think!

Read on to find out more about how to set up an online business in India and get an e-commerce license.

Did you know? Under the Central Goods & Service Tax (CGST) Act, all online retailers must be registered irrespective of their annual revenue.

What Is e-Commerce?

E-commerce, often called digital commerce, refers to transactions conducted via electronic means. E-commerce is the exchange of money or the buying and selling of goods through an electronic network like the internet.

What Is an eCommerce Business Licence?

A municipal or state government issues a business licence to allow a business to operate. Businesses must apply for a business licence in India so the government can keep their records for tax-related reasons. A company owner who holds one of these licences is also shielded from penalties or termination by municipal or state authorities.

If you have a business banking account but you don’t have a licence, then your revenue earned can be taken from you, and you can risk severe penalties. The exact licensing requirements apply to other enterprises and e-commerce companies.

Also Read: Need a PAN Card for Your Business? Learn How to Apply for Company Pan Card

How to Obtain an e-Commerce Business Licence in India?

Depending on the area, obtaining a licence to run a company may include filling out a short application form and paying a fee. Additionally, you'll have to give some background data on your company. 

Although each state has different specifications, most business license applications require the same data and paperwork.

Here they are!

Paperwork Or Licence for Incorporation and E-Commerce Business

All types of businesses and professionals in India require their own business license. You need to get your own business license if you wish to have a Payment Gateway and set up a physical shop and employ some people. Also, most eCommerce businesses are required to set up an online store which will contain details about the nature of the business and products being sold on the website. Below ahead is given few licences that is required for e-commerce business.

  • Goods and Service Tax- If you are not living in the North-east states of India ( Whose annual turnover is Rs 20 lakh) then you need to apply for GST Registration which is a pan based registration. 
  • Shops and establishments act- If you have an e-commerce business then you definitely need this licence for getting payment gateway. Also if you are a shop owner and want to hire few employees under you then you require this license.

Also Read: How To Get A Business License In India?

A Tax Licence for Sales

While it may seem strange, you need a license before starting sales business. A state's first concern is making sure your company will pay taxes. The official website of Taxpayers Identification Number will include all the details you require to obtain a tax identification number for your company. Don't expect your firm to last very long if you utilise an e-commerce payment gateway and digital commerce processing of credit cards platform, even without the state getting a share.

Permits and Inspections

You must examine it if you want to run any physical locations for your business (such as a warehouse & shipping, a production facility, etc.). 

Licences and Permits Required for Your Online selling Business

Licence for Business Operations

Your online store can operate legally in your town, nation, or state if you have a business online services licence. A variation of this licence will be required for practically every internet company to operate lawfully. To identify the appropriate support and submit an application, you can also visit the official government website about Indian E-commerce business. From there you will get to learn more about the rules governing these licences and how to enrol for them. The prerequisites for acquiring these licences are often not too difficult to meet, and there may be a minor charge.

Licence for DBA (Doing-Business As)

You can run your internet business under a different name than your own with the use of a DBA licence.  Although a DBA is not required, it is something to think about having as it satisfies some criteria for opening a company’s checking account and enforcing any essential contracts.

Seller's Licence

Most firms that sell products or services online need a seller's licence (or seller's licence). Almost all states require a seller's ecommerce permit reach lawfully sell goods online, although each state has different rules, costs, and other specifications. To ensure you have the necessary permissions, contact your state's licensing office or division of revenue. Applying for the appropriate sellers' licences from the state is essential if you want to offer digital or even other intangible goods or services since this business licence is still necessary.

Sales Tax Permit 

Residence enterprises that offer taxable goods and services must collect and remit sales tax. Obtaining a Sales Tax licence will be necessary for this. Because sales taxes vary by state, it's vital to remember that you should verify with the nation and any towns where you conduct business to ensure you are adhering to their regulations. Make it essential to find out whether the state where you run the company requires any other tax licenses than a sales tax license. The collection of sales tax without permission is one thing you must undoubtedly resist doing since it might result in costly fines.

Permit for Home Occupation

Many proprietors of e-commerce businesses run their businesses from their homes. This enables them to circumvent some of the licences and permissions associated with commercial premises, although it does not feel entirely free. By applying for a residential occupation licence, you can ensure that your neighborhood is permitted for home economic activity and that your operation won't disrupt the area with extra traffic or noise. For information on registering for a home occupancy permit in your region, visit the website of your city's administration website.

Professional Licence

An occupational licence is not necessary for every internet business; it all varies by your industry and the job you undertake. For instance, if you're an accountant, you'll need an occupational licence to do business need and build a reputation. Using tools such as the National Employment Licensing Database, you can assess if you require occupational approval. You must get the relevant occupational permissions if your company needs specialised education, training, or licence to function lawfully. It's doubtful that you'll require occupational approval if all you're doing is selling goods online.

Also Read: 10 Tips for Successful Money Management for A Profitable Business

Conclusion:

A company licence is among the most crucial things you should obtain when opening an online store. You'll be able to conduct business legally and be shielded from legal action. Additionally, it will make it possible for the government to monitor and tax your company and for you to apply for financial aid in difficult times.

Start working on a B2B or DTC marketing strategy once you obtain the necessary licences and permissions. You may see significant development during your first year if the business begins establishing itself and work on identifying customers early enough.

After becoming informed about business licensing, read a few eCommerce books or blogs to gain insight into other facets of managing an online store. Your chances of success increase with the knowledge you possess at the outset.

Follow Khatabook for the latest updates, news blogs, and articles related to micro, small and medium businesses (MSMEs), business tips, income tax, GST, salary, and accounting.

FAQs

Q: What exactly is an e-Commerce account?

Ans:

Ecommerce, often called electronic commerce or online marketing refers to the purchase and sale of products or services through the internet and the transmission of money and data to complete these transactions.

Q: Do drop shippers require a business licence?

Ans:

Drop shipping enterprises eventually need special permits. Although most localities demand business licences, drop shipping enterprises may not be subject to all states' requirements.

Q: What is a trade licence for e-Commerce?

Ans:

The E-Trader licence enables people or sole proprietors to market their goods and services through social media. Additionally, it increases clients' trust when they purchase online.

Q: Do we need a licence for an online business in India?

Ans:

When conducting online business, you must keep an active account in your company's name. You must ensure that your organisation is a corporate construct to accomplish this. Register with the tax authorities and receive an establishment licence to confirm this.

Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.
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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.