How to Start an Ecommerce Business in India (2026): GST, Marketplaces, ONDC and a ₹ Budget

An ecommerce business sells goods or services over the internet — through a marketplace such as Amazon, Flipkart or Meesho, through your own website, through social media, or across India's open ONDC network. Getting a store online takes a weekend. Getting the tax, consumer-law and unit economics right is what decides whether it survives. This guide walks through the choices and registrations an Indian seller needs in 2026, including the GST exemption for small sellers, the TCS and TDS the platforms deduct, and the e-commerce rules notified in September 2026.

Quick answer

To start an ecommerce business in India, pick a product and a business structure, get PAN and a current account, then GST registration — compulsory for most online sellers of goods, regardless of turnover. A small seller whose sales stay within one state and below ₹40 lakh can instead take a free enrolment number. Then list on a marketplace, ONDC or your own site, and price every product after fees, shipping and returns.

• Marketplaces deduct GST TCS of 0.5% (0.25% CGST + 0.25% SGST, or 0.5% IGST) and income-tax TDS of 0.1% — both recoverable

• Inter-state online sales need a regular GSTIN; GST registration itself is free

• New consumer e-commerce rules apply from 1 January 2027: more seller disclosures, honest discount pricing

• Budget: our small apparel-brand example needs about ₹2.7 lakh, mostly stock

Choose your ecommerce business model

Before registrations, decide what you will sell and how. The model determines your capital, margins and the compliance load.

• Own inventory — you buy or make stock and ship it. Best margins and quality control; highest cash tied up.
• Manufacturer or D2C brand — you make the product (or have it made under your brand) and sell direct. Needs a brand name worth protecting — file a trademark early.
• Dropshipping — a supplier ships on your behalf. Low capital, but thin margins, little control over delivery, and you are still the seller in law.
• Reselling on social commerce — WhatsApp and Instagram catalogues; easy to start but harder to scale and to collect payments safely.
• Services — online courses, design, consulting. Different GST thresholds apply; this guide focuses on goods.

Business structure. A sole proprietorship needs no incorporation and is how most sellers begin; marketplaces accept a proprietor's PAN and GSTIN. An LLP or private limited company limits personal liability and makes outside investment easier, at the cost of annual filings. Whatever you pick, register on Udyam — it is free, and the new e-commerce rules let you show a Udyam number to buyers.

Marketplace vs own website vs ONDC

	Marketplace (Amazon, Flipkart, Meesho)	Own website (Shopify, WooCommerce)	ONDC via a seller app
Buyers	Already there; you compete on search	You must bring traffic	Shown across several buyer apps
Fees	Referral + closing + shipping fees, varying by category	Platform plan + payment gateway + courier	Seller-app and logistics charges
Customer data	Mostly with the platform	Yours	Shared by the network participants
GST	Regular GSTIN, or enrolment number for small intra-state sellers	Regular rules — threshold applies	Through e-commerce operators, as for marketplaces
Best for	Testing demand fast	Brands with repeat buyers	Local sellers, grocery, food, home goods

Buyers

Marketplace (Amazon, Flipkart, Meesho)

Already there; you compete on search

Own website (Shopify, WooCommerce)

You must bring traffic

ONDC via a seller app

Shown across several buyer apps

Fees

Marketplace (Amazon, Flipkart, Meesho)

Referral + closing + shipping fees, varying by category

Own website (Shopify, WooCommerce)

Platform plan + payment gateway + courier

ONDC via a seller app

Seller-app and logistics charges

Customer data

Marketplace (Amazon, Flipkart, Meesho)

Mostly with the platform

Own website (Shopify, WooCommerce)

Yours

ONDC via a seller app

Shared by the network participants

GST

Marketplace (Amazon, Flipkart, Meesho)

Regular GSTIN, or enrolment number for small intra-state sellers

Own website (Shopify, WooCommerce)

Regular rules — threshold applies

ONDC via a seller app

Through e-commerce operators, as for marketplaces

Best for

Marketplace (Amazon, Flipkart, Meesho)

Testing demand fast

Own website (Shopify, WooCommerce)

Brands with repeat buyers

ONDC via a seller app

Local sellers, grocery, food, home goods

GST rules for online sellers in 2026

GST is the registration most new sellers trip over, because the normal turnover threshold doesn't always apply online.

The default: compulsory registration. Section 24 of the CGST Act requires anyone supplying goods through an e-commerce operator that collects TCS to register, whatever their turnover. That covers selling on Amazon, Flipkart, Meesho and other marketplaces. Anyone making inter-state sales of goods must also register. Registration is free — see our GST registration guide.

The exemption for small sellers. From 1 October 2023, under Notification 34/2023–Central Tax, a goods seller can sell through e-commerce operators without GST registration if all of these hold:

• aggregate turnover in the previous and current year is below the registration threshold for the state (₹40 lakh for most goods-only suppliers);
• supplies are made in only one state or UT, with no inter-state sales;
• the seller has a PAN and declares it, with the business address and state, on the GST portal;
• the portal issues an enrolment number before the first sale.

On gst.gov.in, the path is User Services → Generate User Id for Unregistered Applicant, then tick the box to apply as a supplier to e-commerce operators. In practice this suits hyperlocal sellers — a bakery or kirana selling on a city-level app — more than anyone wanting pan-India orders.

Selling across states. In September 2025 the GST Council approved in principle a simplified registration scheme for small suppliers selling through e-commerce operators in several states, who currently need a place of business in each. The detailed scheme was to come back to the Council; check gst.gov.in for whether it is live before you plan multi-state registrations.

Composition. Composition taxpayers may sell goods through e-commerce operators within their own state, but not inter-state. If you plan to sell nationally, the regular scheme is usually the only option.

TCS and TDS: what the platform holds back

For individual sellers who give their PAN or Aadhaar, TDS starts only after ₹5 lakh of sales in a year. Reconcile both against your payouts every month — mismatches are common and hard to fix a year later.

Consignments above ₹50,000 generally need an e-way bill; marketplaces' logistics arms usually generate it, but on self-ship orders it is your job.

Consumer protection: the e-commerce rules, including the 2026 amendment

The Consumer Protection (E-Commerce) Rules, 2020 apply to every online seller, not only platforms. Sellers on a marketplace must take back defective, deficient or late goods, sign a written contract with the platform, and give the platform accurate information on returns, warranties and delivery.

The Consumer Protection (E-Commerce) (Amendment) Rules, 2026, notified on 9 September 2026, apply from 1 January 2027. The changes that matter to a seller:

• More product information. Sellers must provide country of origin, best-before or use-before date (subject to food law), return, refund and exchange terms, warranty, delivery, return-shipping cost and payment modes.
• Your identification numbers. Sellers must give the platform any government-issued identification number, including a GSTIN or MSME (Udyam) registration number.
• Honest discounts. When you or the platform announce a price cut, the "prior price" shown must be the lowest price in the 30 days before the announcement.
• Your name on the invoice. Platforms must print the seller's name in the same font size as their own.
• Faster complaints. E-commerce entities' grievance officers must acknowledge a complaint within 48 hours and resolve it within one month.
• Sponsored listings must be clearly labelled, and search results must not be manipulated.

If you run your own website you are an "inventory e-commerce entity" and these duties fall on you directly: display your legal name, address and grievance officer's contact, follow the dark-patterns guidelines, and publish clear return and refund terms.

How to start an ecommerce business: step by step

From product idea to first order

1. 1

   Validate the product

   Check marketplace search results, reviews and price bands for your product. Order competitors' products and note what buyers complain about.

   Tip: Pick products that ship well — light, unbreakable, few sizes. Returns kill margins in apparel and footwear.

2. 2

   Set up the business

   Choose a structure, get PAN, open a current account and register on Udyam.

3. 3

   GST registration or enrolment

   Apply for a GSTIN on gst.gov.in, or take an enrolment number if you qualify for the small-seller exemption.

   Open the GST portal
4. 4

   Product-specific licences

   Food needs FSSAI registration or a licence; packaged goods need Legal Metrology declarations; cosmetics, electronics and toys may need BIS or other certifications.

5. 5

   Choose channels and list

   Register as a seller on one marketplace, set up an ONDC seller app or build a site. Upload photos, HSN codes, GST rates and return policies.

6. 6

   Price for profit

   Work out fees, shipping, packaging, returns and ads per order before you go live.

7. 7

   Ship, reconcile, repeat

   Track every payout against orders, TCS and TDS. Reorder winners; drop slow stock.

ONDC: selling on the open network

The Open Network for Digital Commerce (ONDC) is a DPIIT initiative, set up as a non-profit Section 8 company. It is not an app; it is a set of open protocols that let a seller listed through one seller application be found by buyers on many buyer applications. ONDC does not run an e-commerce service itself.

To join, a small seller signs up with an ONDC-enabled seller app (several billing and inventory software providers offer one), completes KYC with PAN, GSTIN or enrolment details and bank account, and uploads a catalogue. Delivery is usually arranged through logistics providers on the network. Charges are set by the seller app and logistics partner, so compare them as you would marketplace fees. Grocery, food, fashion and home goods are among the established categories.

A worked ₹ budget and break-even

The figures below are an illustrative estimate for a small women's-wear brand selling kurtas online from a rented storeroom. They are built from Amazon's published fee components and assumed supplier prices; your category and suppliers will differ.

Start-up spend:

Per order. A kurta sells for ₹899 including 5% GST (apparel up to ₹2,500 attracts 5%), so your net price is about ₹856. Subtract the product cost (₹300), an assumed 10% marketplace commission (₹90), shipping and closing fees (₹90), packaging (₹20), ads (₹80) and a returns allowance (₹40). That leaves about ₹236 per order. GST charged on platform fees is claimable as input tax credit if you are registered, so it isn't counted as a cost.

Fixed costs — a part-time packer, storeroom rent, software and an accountant — come to about ₹40,000 a month. Break-even is 40,000 ÷ 236 ≈ 170 orders a month, or about six a day. Change the numbers to match your product:

Try it — ecommerce break-even

Monthly Fixed CostsSelling Price per UnitVariable Cost per Unit

Contribution Margin / Unit₹236.00

Contribution Margin Ratio27.57%

Break-Even Revenue₹1,45,084.75

Break-Even Units170

Open the full Break Even Calculator (PDF, save, compare)

For marketplace-level detail — referral percentage, fulfilment fees and ads per sale — run each product through the marketplace profit calculator before you list it.

Mistakes new ecommerce sellers make

1. Assuming the ₹40 lakh threshold applies. On a marketplace, registration is compulsory unless you meet every condition of the small-seller exemption.
2. Ignoring returns. In fashion, a large share of orders can come back; price in the reverse shipping and damaged stock.
3. Not reconciling TCS and TDS. Unclaimed credits are lost cash.
4. Fake "was" prices. From 1 January 2027, a struck-through price must be the real lowest price of the previous 30 days.
5. Building a brand on an unprotected name. Search the trademark register before printing labels.
6. Spending on ads before listings convert. Fix photos, titles, sizes and reviews first.
7. Selling regulated products without licences. Food, cosmetics, supplements and electronics each have their own rules; marketplaces delist quickly.

Official links

• GST portal — registration and enrolment for e-commerce suppliersUser Services → Generate User Id for Unregistered Applicant
• Consumer Protection (E-Commerce) Amendment Rules, 2026In force from 1 January 2027
• GST Council 56th meeting recommendations
• ONDC — Open Network for Digital Commerce
• Udyam registrationFree MSME registration
• National Consumer Helpline

What to do next

Decide your channel, then sort GST first: either register for GST or take an enrolment number if you'll sell only within your state. Model every product in the marketplace profit calculator, and set up a clean GST invoice template for direct orders. If your products could sell abroad, our guide on starting an import-export business covers IEC and export incentives; for Amazon-specific steps in the US, see how to sell on Amazon.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

Can I start an ecommerce business without GST in India?

Yes, but only in a narrow case. Since 1 October 2023, a seller of goods whose turnover is below the GST threshold can sell through marketplaces without registering, if all sales stay within one state and the seller takes a PAN-based enrolment number on the GST portal. Selling to buyers in other states, or crossing the threshold, needs a regular GST registration.

How much money do I need to start an ecommerce business in India?

There is no fixed figure; it depends mostly on inventory. Our worked example for a small apparel brand comes to about ₹2.7 lakh: ₹1.5 lakh of stock, photography, a website theme, packaging, a trademark filing, a test ad budget and working capital. Dropshipping or print-on-demand models need less stock money but earn thinner margins.

Should I sell on Amazon and Flipkart or build my own website?

Most new sellers start on marketplaces because the buyers are already there, then add their own website once they have repeat customers. Marketplaces charge referral, closing and shipping fees and control the customer relationship. Your own site avoids commission but you pay for traffic, payment gateway and delivery yourself. Many brands run both, plus ONDC.

What is TCS and TDS for ecommerce sellers?

Marketplaces collect GST TCS of 0.5% (0.25% CGST + 0.25% SGST, or 0.5% IGST) on your net taxable sales and deposit it against your GSTIN; you claim it in your electronic cash ledger. Separately, they deduct income-tax TDS of 0.1% on gross sales, which you claim when filing your income-tax return. Neither is an extra tax, but both hold back working capital.

What changes for online sellers under the 2026 e-commerce rules?

The Consumer Protection (E-Commerce) Amendment Rules, 2026 take effect on 1 January 2027. Sellers on marketplaces must give the platform details such as country of origin, return and warranty terms and any government identification number like a GSTIN or Udyam number. Discounts must show the lowest price of the previous 30 days as the prior price.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 7 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.Consumer Protection (E-Commerce) (Amendment) Rules, 2026 — Gazette notification of 9 September 2026 — Department of Consumer Affairs · accessed 7 October 2026
2. 2.Facility of enrolment for supply of goods through e-commerce operators by GST un-registered suppliers (GSTN advisory, 12 October 2023) — GSTN (copy) · accessed 7 October 2026
3. 3.Recommendations of the 56th meeting of the GST Council (3 September 2025) — GST Council / PIB · accessed 7 October 2026
4. 4.Revolutionizing Digital Commerce: The ONDC Initiative — PIB (Ministry of Commerce & Industry) · accessed 7 October 2026
5. 5.Amazon.in seller fees and pricing — Amazon Seller Services · accessed 7 October 2026
6. 6.CGST: e-commerce operator TCS collection rate reduced to 0.25% (Notification 15/2024-CT) — TaxGuru · accessed 7 October 2026
7. 7.TDS and TCS changes from 1 April 2026 — TaxGuru · accessed 7 October 2026
8. 8.Exemption of suppliers of goods through e-commerce operators from GST registration (Notification 34/2023) — Taxscan · accessed 7 October 2026