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Legal Compliance for E-Commerce Business in India: All You Need to Know

Narendra Kumar

| Updated: Jun 19, 2019 | Category: Business Registrations

E-Commerce Business in India

E-Commerce refers to electronic commerce. It is the most important source of business globally. E-Commerce is playing a significant role in the paperless exchange of business information using Electronic Data Interchange, Electronic mail, Fund Transfer electronically and other new technologies based on the network. E-commerce business in India is playing a vital role in covering a wide range of businesses.

What is E-Commerce Business?

It refers to the electronic exchange of goods and services with no barrier of time and distance. E-Commerce involves both product and services. It provides countless opportunities to the startups and existing entrepreneurs to open a new platform of sales market electronically.

E-Commerce Business

Key Factors of E-Commerce Business in India

There are certain key factors of E-Commerce Business –

  1. Product or service.
  2. Website to sell the product.
  3. A route for the customers to reach the website of the organization electronically.
  4. Way to accept order and Money.
  5. Return Policy as after- sales service.
  6. Shipping facility Free or chargeable depending on the organization policies.
  7. Warranty facility in case of damage of products in the way.

Models of E-Commerce Business

E-commerce has four models which represent a range of various transactions which varies from participant to participant –

E-Commerce Business
  • B2B Commerce

B2B requires two or more business entities. The application is utilized to facilitate Supplier & Buyer centric market electronically. The parties of B2B are Business Partner. It is the most extensively developing E-commerce trend nowadays.

  • B2C Commerce

B2C commerce has gained popularity to a simplified way to buy products. It refers to buying and selling of products i.e. goods or services on the website. In B2C Commerce goods can be easily transformed into the digital format.

  • C2C Commerce

It refers to online dealing of goods and services between people where two people deal online on the basis of their requirement and needs and are becoming more popular these days. It promotes consumer dealings with other consumers on the website.

  • C2B Commerce

It enables a consumer to interact with the company for the price of product and services offered by a company. This provides consumers with market strategies.

Also Read: E-commerce Business Model in India

Legal Compliances for E-Commerce Business in India

In E-Commerce, the business person expects matching of the requirements of the consumers in the best possible way. It reduces the time and flexible for both the merchant and consumers

E-commerce is a platform where the business person and customers interact online through website

To start an E-Commerce business, it is required to fulfill the following compliances –

Company Incorporation or LLP

It is good to have a company or LLP before starting the e-commerce business for the ease of doing business and for transparency of records.

In case of partnership and proprietorship business, it is difficult to have limited liability protection in case of litigation, so it is safer to incorporate a company or LLP for smooth functioning.

Payment Gateway and Opening of Bank Account

To process the customer payments in the E-commerce website business a payment gateway is necessary. It provides a route to accept the debit cards and credit cards and net banking payments from different banks and credit cards issued by the companies. For every e-commerce business, it is necessary to have a payment gateway to accept online payments. By payment gateway, the amount receive from the customers is sent/ transferred to the bank account of the business.

It is convenient in case of Company or LLP to open a bank account in the name of Company or LLP in any bank. To receive the payment from the payment gateway it is necessary to open a bank account in the name of the business i.e. name of the company or name of the LLP. In Partnership or proprietorship business it is important to have GST registration before opening a Bank account.

GST Registration

To start an E-commerce business GST registration is mandatory. A business having a turnover of more than Rs.40 lakh annually and doing business interstate outward supplies of goods, irrespective of turnover is required to have a GST registration. Through online GST portal, GST registration can be done by attaching all the required documents in the form.

Documentation

It is necessary to protect the business of the business for that every businessperson is required to do legal documentation for future perspective. The agreements and the legal documents are provided by the market place where the seller and customer have to stand by the agreement and read the term and conditions before signing.

E-commerce Business in India

Process of getting Legal Protection in E-commerce Business in India

E-commerce starts with launching the online platform through a mode of website and includes:

  1. Launching the online store (website), page layout
  2. Protection of data
  3. Models of E-commerce and the term of service
  4. Legal documentation and advisory which affects the projects
  5. Marketing strategy and study of market requirements
  6. Deciding the virtual payment platforms /gateway
  7. Market Campaign
  8. Legal agreements like manufacturing and selling agreement.
  9. Customer base and requirement
  10. Process and legal actions in case of breach of contract
  11. Analyzing the market behavior of competitors
  12. Proceedings in case of litigation
  13. Defense of unjustified allegation and unauthorized warnings
  14. Reason of interim injunction, if any and the protective measure taken against the interim injunctions
  15. Examination of claims i.e. omission, damage etc
  16. Representation in case of proceedings

Conclusion

For any type of business Electronic commerce involves the transfer of information across the internet globally. It provides a platform where two business persons, consumers interact directly and fix the deal without a physical meet. Electronic mail, Mobile commerce and electronic data interchangeable are playing a vital role in the E-Commerce business.

Businesses move sections of their operations onto the internet which as a result blurred conventional commerce. As E-commerce is a business strategy where technologies are used to achieve the goal of business and for-profit maximization by facilitating the delivery of goods and services.

Also Read: How to Start e-Commerce Business in India

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Narendra Kumar

Experienced Finance and Legal Professional with 12+ Years of Experience in Legal, Finance, Fintech, Blockchain, and Revenue Management.

Business Plan Consultant


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