Let’s cut through the buzz. E-commerce in India is booming, but behind every flashy website and Instagram ad is a string of legal duties that many sellers either don’t know or worse ignore. You can have the best product in town, but if your business isn’t legally set up right, one complaint, one notice, or one compliance slip can bring it all crashing down.

This blog isn’t for the big shots alone. Even if you’re just starting your online store from a spare room, the law doesn’t go easy on you. If you’re selling online in India on your own website, WhatsApp, Instagram, or platforms like Amazon or Flipkart this is what the law requires from you. Not knowing is no longer an excuse.

FIRST THINGS FIRST: REGISTER YOUR BUSINESS

Before you even think of collecting your first online payment, get your basics in place.

You can start as a:

∙ Sole proprietor (simple and fast)
∙ Partnership or LLP
∙ Private Limited Company
∙ One Person Company (if you're going solo but want limited liability)

Whichever structure you choose, you need:

∙ A PAN card (in your business name if applicable)
∙ A current account in a bank
∙ GST registration (more on that in a moment)
∙ Shop and Establishment registration (yes, even if you're working from home most states require it)

This setup isn’t just for compliance. It gives you credibility. And trust me, once you start dealing with payment gateways or big marketplaces, they’ll ask for all of it.

GST ISN’T OPTIONAL

Here’s a myth: “I don’t make ₹40 lakhs a year, so I don’t need GST.” Wrong.

If you sell goods or services across states or through marketplaces like Amazon, Flipkart, Meesho, etc., GST registration is mandatory from day one.

You’ll need to:

∙ File GSTR-1 and GSTR-3B monthly
∙ Issue proper tax invoices
∙ Collect GST from customers and pay it forward

Also, if you operate an e-commerce platform yourself, you're supposed to deduct TCS (Tax Collected at Source) and file TCS returns. Don’t ignore this it’s a red flag for tax officers.

CONSUMER PROTECTION RULES ARE VERY MUCH ALIVE

The Consumer Protection (E-Commerce) Rules, 2020 are not some boring policy you can skip. If you’re selling online, these rules apply to you.

You’re legally required to:

∙ Show full product info: price, delivery time, return/refund policy
∙ Mention seller details (even if it’s you)
∙ Have a working grievance redressal system
∙ Honour warranties, returns, and refunds
∙ Stop shady practices like fake reviews or false discounts

Ignore these rules, and you’re not just inviting a bad Google review. You’re looking at legal notices, penalties, and even action from the Central Consumer Protection Authority.

YOU NEED A PROPER WEBSITE POLICY

If you have a website or even a payment page you must have a few key legal documents in place:

∙ Terms & Conditions: What you offer, how you offer it, what happens in case of dispute.
∙ Privacy Policy: How you collect and use customer data.
∙ Return/Refund Policy: Clear, specific, and compliant with consumer laws.

Don’t just copy this from another site. Get it vetted. If something goes wrong and you end up in court, these are your first line of defense. Draft them as if you’ll need them one day because chances are, you will.

HANDLE DATA WITH CARE BECAUSE THE LAW IS WATCHING

Even if you’re not a tech company, you handle personal data every day names, phone numbers, emails, and payment info. Under the Information Technology Act, 2000 and IT Rules, you’re expected to:

∙ Take consent before collecting sensitive data
∙ Store data securely
∙ Appoint a grievance officer (if you’re handling a high volume)
∙ Be transparent about your privacy practices

Soon, with the Digital Personal Data Protection Act, 2023 kicking in, you’ll have more serious responsibilities:

∙ Data collection must be for specific, lawful purposes
∙ Users must be allowed to delete or correct their data
∙ You’ll need to report breaches

If you get hacked and customer data leaks, expect not just angry buyers but legal penalties.

SELLING SOMEONE ELSE’S BRAND? BETTER BE LEGALLY CLEAN

Many e-commerce sellers think reselling branded products is fair game. It’s not, unless you’re:

∙ An authorized reseller
∙ Not misusing the brand’s trademark
∙ Not selling fakes (even unknowingly)

India has strong laws under the Trade Marks Act, 1999 and Copyright Act, 1957. If you’re caught selling knock-offs even by accident you can face criminal charges. Marketplace platforms may block you. Brands may sue you. It’s not worth the risk.

If you’re building your own brand, register your trademark as soon as possible. Don’t wait until someone else grabs it.

RETURNS, REFUNDS, AND DELIVERY: DON’T MESS IT UP

People will return things. That’s just how e-commerce works.

The law says you must:

∙ Make your return and refund policy clear
∙ Honour what you promise don’t play with words
∙ Refund within the committed time

Delayed refunds or bad delivery experiences aren’t just bad business they're legally risky. Many complaints go straight to consumer courts. And yes, buyers win.

WHAT ABOUT INFLUENCER MARKETING AND ADS? YES, THAT’S REGULATED TOO

If you're running paid promotions or working with influencers:

∙ Always disclose sponsorships (as per ASCI Guidelines)
∙ Don’t make false claims (“100% natural,” “guaranteed results”)
∙ Don’t trick users with hidden terms

The Consumer Protection Act, 2019 now takes advertising seriously. You can be fined for misleading ads or vague discounts. So can your influencers.

FDI RULES DON’T GET CAUGHT IN THE WEB

This matters if your startup has foreign investors or you’re running a platform model.

According to India’s FDI policy:

• ∙ 100% FDI is allowed in marketplace model (like Amazon), but not in inventory-based models (where you own stock and sell).
  ∙ If you have foreign money, you can’t:

o Sell your own inventory directly
o Control product pricing
o Depend on one vendor for over 25% of sales

Violating FDI rules can shut your business down. Not joking.

MANDATORY DISCLOSURES YOU CAN’T SKIP

Here’s what every e-commerce website (including those selling via WhatsApp + Instagram) must display:

∙ Business name and registered address
∙ Contact email and phone number
∙ GSTIN (if applicable)
∙ Terms of use
∙ Return and refund policy
∙ Grievance officer contact

Yes, all of this is mandatory. Don’t assume you’re too small to be noticed.

PENALTIES ARE REAL AND NOT JUST FOR BIG COMPANIES

Here’s what happens when you ignore the legal side:

∙ Penalties from consumer authorities (₹10 lakh+)
∙ GST department inquiries
∙ Website or product listings being taken down
∙ Fines for data breaches
∙ Legal notices for IP violations

You don’t need to break the law to get into trouble. Sometimes, not knowing the law is enough.

FINAL WORDS: DO IT RIGHT FROM DAY ONE

Running an e-commerce business in India can be rewarding but it’s not a free-for-all. You don’t have to fear the law, but you do have to respect it. Legal compliance isn’t a one-time formality. It’s a habit. A discipline.

Start clean. Keep records. Draft policies properly. File taxes on time. If you’re unsure, get a legal check-up.

Because when the orders roll in, you don’t want legal notices rolling in too.