Avoid Penalties: Compliance Checklist for E-commerce Sellers
The rise of e-commerce marketplaces has opened extensive opportunities for retailers, but comes with legal considerations that must be followed. For instance, non-compliance with business tax, data and consumer regulations can lead to hefty penalties and loss of customer trust.
To avoid such issues, this blog will present a compliance checklist that every e-commerce seller should follow.
1. Complete the business registration process
The first and foremost step is to ensure that you complete business registration, followed by the rules of regulatory bodies. This may include:
- Choosing an appropriate business structure, such as a sole proprietorship, LLC or corporation
- Registering your business name and address
- Open a business bank account
- Applying for a tax identification number, such as GSTIN (Goods & Services Tax Identification Number)
- Collect relevant business licenses or permits
- Registering for GST or VAT if your income exceeds the prescribed threshold. This process is mandatory if your turnover exceeds ₹40 lakhs or if you sell interstate products.
Review all documentation details and keep them updated to reflect any business changes. These compliance tips for online retailers help you to build a strong foundation of your e-commerce listings.
2. Register and file goods and services tax (GST)
In India, all e-commerce sellers are mandated to register under the GST regime even if their turnover is below the threshold. This is due to interstate purchasing or selling of materials.
To file GST returns, you should follow this process:
- Depending on the product category and its HSN codes, collect the relevant GST.
- File monthly or quarterly GSTR-1, GSTR-3B and annual returns.
- Generate and keep secure all digital invoices. Also, reconcile them regularly with your platform data.
It is also important to consult a qualified tax advisor who is familiar with your market and e-commerce platform during the business registration process.
3. Follow the data privacy and IT rules
Protecting customers and business data is important for safeguarding them against identity theft or any other form of damage. India’s Information Technology Act, 2000 and Data Protection Regulations govern how to collect and store customer data.
These regulations mandate organisations to follow these steps before collecting customers’ data:
- Post a transparent privacy policy statement on your website.
- Store customer data in high-security data centres with access controls
- Take users’ consent before collecting personal data
- Use secure payment gateways with PCI-DSS compliance
- Follow CERT-In guidelines for cybersecurity measures
Following these aspects helps you to maintain your business’s integrity while improving customers’ trust while filling in their personal details for product deliveries.
4. Ensure transparency in product listings
Your product listings must comply with India’s Legal Metrology Rules 2011 and Consumer Protection Rules 2020.
Here are some checklists that you should follow to maintain transparency about your products:
- Display MRP, seller details, country of origin, return policy and warranty information
- Avoid making claims that are not offered by your products
- Provide a clear and accessible grievance redressal mechanism
Besides following these criteria, e-commerce sellers must also appoint a Grievance Officer and publish their contact details to handle customer complaints within the defined timelines.
5. Comply with platform policies
If you are selling products via e-commerce marketplaces, you must adhere to their seller agreements and polices.
Common platform compliance tips for online retailers include:
- Timely order fulfilment
- Transparent return/refund handling
- Providing invoices with GSTIN and HSN/SAC codes
- Ensure product authenticity to avoid delisting
Along with that, it is also important to review the terms of service. As e-commerce marketplace platforms update their compliance standards to reflect regulatory changes.
Conclusion
Following the correct business registration process is essential for running an e-commerce company in India. This includes accurately filling GST returns and protecting customer data. Along with that, following the important compliance helps you avoid penalties and build customers’ trust.
