Starting an e-commerce business in India requires more than choosing a website platform. Before you list your first product, you need to have the right business structure, GST registration, a compliant payment gateway and the correct legal pages on your website. This guide covers every step in order.
Step 1: Decide Your Business Structure
The legal entity you use to operate your e-commerce store affects your tax obligations, liability exposure and ability to open a business bank account.
Sole Proprietorship is the simplest structure and easiest to set up. There is no separation between your personal and business assets. Suitable for very early-stage sellers with low volume.
Private Limited Company is the preferred structure for e-commerce businesses expecting growth. It offers limited liability, easier investor relations and a professional image. Incorporation takes 7–15 working days.
One Person Company (OPC) is a middle ground — limited liability with a single owner. Suitable if you want incorporation benefits without a co-founder.
LLP is a reasonable choice for two or more partners who want flexibility and limited liability without the compliance overhead of a private limited company.
Choosing the right structure before registering for GST is important, as your GST registration will be in the name of the entity. Changing structure later requires re-registration.
Step 2: GST Registration (Mandatory for E-Commerce)
Under Section 24 of the CGST Act, GST registration is mandatory for all e-commerce operators and e-commerce sellers, regardless of their turnover. The composition scheme — available to small businesses with turnover below ₹1.5 crore — is not available to e-commerce sellers.
If you are an individual selling handmade products on your own website, you still need GST registration. If you plan to sell exclusively through a marketplace (Amazon, Flipkart, Meesho), you are a seller on their platform and still required to register.
You can complete GST registration online through the GST portal. Required documents typically include PAN, Aadhaar, bank account details, business address proof and a photograph.
Once registered, your GSTIN must appear on your website, all invoices and all marketplace seller profiles.
Step 3: Open a Business Bank Account
You will need a current account in the name of your business entity (not your personal savings account) to:
- Receive payments from your payment gateway
- Pay GST, TDS and supplier invoices
- Provide proof of bank account to your payment gateway provider
Most banks require your business registration documents, PAN and address proof. For companies, you will need the Certificate of Incorporation, MoA/AoA and the board resolution authorising account opening.
Step 4: Choose Your E-Commerce Platform
Shopify
Shopify is a hosted SaaS platform — you pay a monthly subscription (currently starting at USD 29/month for basic) and Shopify handles hosting, security and core updates. It is well-suited to:
- Product-based businesses that do not need heavy customisation
- Stores wanting quick launch with professional templates
- Businesses that want a large app ecosystem for marketing, inventory and shipping
Shopify charges an additional transaction fee unless you use Shopify Payments, which is not available in India — so you will use a third-party payment gateway (Razorpay, PayU, Cashfree), which means an additional fee of 0.5–2% per transaction depending on the gateway.
WooCommerce (on WordPress)
WooCommerce is an open-source plugin for WordPress. You host it yourself (or via managed WordPress hosting), giving you complete control over the codebase and no per-transaction platform fee. It is well-suited to:
- Businesses with existing WordPress websites
- Stores needing high customisation
- Sellers on a tight monthly budget who have technical resources
Costs include hosting (₹1,000–₹10,000/month depending on provider and traffic), domain, SSL certificate and any premium plugins or themes.
Custom E-Commerce Development
For businesses with complex requirements — unusual product configurations, B2B wholesale pricing, integration with an ERP, custom logistics logic — a custom e-commerce website built on a framework like Next.js, Angular or Laravel gives you full control. The higher upfront cost is justified when off-the-shelf platforms would require extensive workarounds.
Step 5: Integrate a Payment Gateway
Indian payment gateways must be integrated so customers can pay via UPI, net banking, credit/debit cards, wallets and EMI. Compliance requirements under RBI regulations mean you must use a gateway licensed in India.
Razorpay is popular for its developer-friendly API, strong documentation and support for all Indian payment methods including UPI and Bharat QR.
PayU has a large existing merchant base and strong relationships with banks for EMI options.
Cashfree Payments is gaining adoption for its instant bank transfers and strong payout capabilities — useful if you also need to pay suppliers or run a marketplace.
To activate a payment gateway, you will need to submit your business registration documents, bank account details, GSTIN, website URL and a working product/service page. Approval typically takes 2–7 working days.
Step 6: Set Up Logistics and Fulfilment
You need a reliable way to deliver physical products. Options include:
Direct courier account with companies like DTDC, BlueDart or Delhivery. Suitable for low volumes.
Shipping aggregator (ShipRocket, EasyPost, Pickrr) — these platforms give you access to multiple courier partners under one dashboard, with negotiated rates and an integrated tracking system. Recommended for most growing stores.
Fulfilment by marketplace — if selling on Amazon or Flipkart, their FBA/FBF services handle pick, pack and ship for a fee.
Your website should clearly state shipping timelines, the areas you deliver to and your return and exchange process.
Step 7: Build the Required Legal Pages
Indian e-commerce stores must include several legal pages, both to comply with the Information Technology Act and the Consumer Protection (E-Commerce) Rules, 2020, and to maintain consumer trust:
Privacy Policy: Explain what personal data you collect, how it is used, with whom it is shared and how users can exercise their rights. This is mandatory under the IT Act and increasingly important under the DPDP Act.
Terms and Conditions: Your sale terms, disclaimers, limitations of liability and dispute resolution mechanism.
Return and Refund Policy: Consumer Protection (E-Commerce) Rules, 2020 require clear disclosure of your return, refund and cancellation policy. It must be prominently displayed before checkout.
Shipping Policy: Expected delivery times, carriers used, areas you serve, and what happens if a shipment is lost.
Contact and Grievance Officer details: The Consumer Protection (E-Commerce) Rules require a Grievance Redressal Officer with name and contact details. This is a legal requirement.
Step 8: Technical SEO for E-Commerce
An e-commerce store with no organic search traffic depends entirely on paid advertising. A few fundamentals make a significant difference:
- Unique, descriptive title and meta description for every product and category page
- Product schema (JSON-LD) so search engines can display price, availability and ratings
- Clean, crawlable URLs (e.g.,
/products/cotton-kurta-bluenot/p?id=4782) - Fast loading, especially on mobile — images should be compressed and served in WebP format
- Internal linking from category pages to product pages
- An XML sitemap listing all product and category pages
These are not optional extras — for an e-commerce store, organic search is a significant free traffic channel that takes 3–12 months to develop but then operates without ongoing cost.
Marketplace vs Your Own Website
Many Indian sellers start on marketplaces (Amazon, Flipkart, Meesho) and later build their own store. The two are not mutually exclusive:
| Factor | Marketplace | Own Website |
|---|---|---|
| Setup time | 1–2 days | 2–8 weeks |
| Customer acquisition | Built-in (platform's traffic) | Requires your own marketing |
| Brand control | Limited | Complete |
| Fees | 5–30% of sale price | Payment gateway fee (1.5–2.5%) |
| Customer data | Platform owns it | You own it |
| Long-term | Platform-dependent | Your asset |
The typical strategy is to launch on marketplaces first for quick sales and market validation, then build your own store in parallel to reduce platform dependency and build a direct customer relationship.
Summary
Setting up a legal, functional e-commerce store in India requires: the right business structure, mandatory GST registration, a current account, a compliant Indian payment gateway, clear legal pages and a logistics solution. The platform you choose — Shopify, WooCommerce or custom — should be selected based on your technical capacity, customisation needs and growth plans, not just the initial cost.
Disclaimer: GST provisions, e-commerce rules and consumer protection regulations are subject to change. This article reflects provisions as of the date of publication. Please verify current requirements with a qualified professional before launching your store.
Frequently Asked Questions
Is GST registration mandatory for selling online in India?
Yes. Under Section 24 of the CGST Act, e-commerce operators and suppliers who supply goods or services through an electronic commerce operator are mandatorily required to register for GST, regardless of their turnover threshold. There is no composition scheme option for e-commerce sellers.
Can a sole proprietor run an e-commerce store in India?
Yes. A sole proprietorship is the simplest structure and can legally operate an e-commerce store. However, a private limited company or LLP offers limited liability protection, easier access to business banking, and is generally preferred if the business is expected to scale.
Which payment gateway should I use for my Indian e-commerce store?
Razorpay, PayU and Cashfree are widely used Indian payment gateways that support UPI, net banking, cards, EMI and wallets. All three integrate with major e-commerce platforms. Razorpay is particularly popular with startups for its developer-friendly API and transparent pricing.
What is the TCS rate for e-commerce operators in India?
E-commerce operators are required to collect TCS (Tax Collected at Source) at 1% (0.5% CGST + 0.5% SGST) on the net value of taxable supplies made through their platform. This applies to operators running a marketplace, not sellers using a marketplace.
Can I sell on both my own website and on Amazon/Flipkart simultaneously?
Yes, selling on both your own website and marketplaces simultaneously is a common and legal strategy. Your GST registration covers both channels. Ensure your pricing, inventory and fulfilment processes are managed to avoid overselling.