Need licence to start online business

Muhammed Talha (Querist) 18 January 2015 This query is : Resolved
Sir, I am B.Tech student me and My friend(B.Tech) wanted to start Online Business.
Business Details:
Through Internet People may join our organization by paying some money say Rs 500/- as a registration fee.
Now,their work is to make join other members to our company for which as a referal they can earn upto Rs.200/- for each reference.(i.e.,Chain System).
Conclusion:
Is it legal in India. If 'YES'
Sir,Please we need License to register our organization and our Business,and know the basic requirements
NOTE: As we are students pursuing B.Tech Our Budget is not high its below Rs.20,000 for licence and infrastructure itself.
Thanking you Sir.
Sir,we will be very thankful Heartily.If you support us in this process

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T. Kalaiselvan, Advocate (Expert) 19 January 2015
This is money link business which is illegal hence cannot be registered, better take the help of a local consultant and then proceed.

Dr J C Vashista (Expert) 19 January 2015
I agree with the expert advise of mr. T Kalaiselvan.
In order to make the chain of members of the organisation, what is your product to offer to the intending members for sale/purchase?
Consult a local lawyer.

Guest (Expert) 19 January 2015
Your proposal suggests as if you want to start a Multi-level marketing (MLM) company, which in fact, is a marketing strategy in which the sales force is compensated not only for sales they generate, but also for the sales of the other salespeople that they recruit. But, you don’t seem to have any real product to sell through your network of online business and expect only to add membership on payment of fee out of which you want to share only a part of the registration fee paid by the recruiter’s down-line to him. That will be totally illegal on your part.

Even in the USA, which is heaven for such networking companies, according to the US Federal Trade Commission (FTC), some of the companies that use multi-level marketing exploit members of their networks and constitute illegal pyramid schemes.

Moreover, companies that use MLM models for compensation have been a frequent subject of criticism and lawsuits. When your budget is below Rs.20,000 even for start up of a business, just give a thought over the situation when law suits start cropping up, how you would like to cope with the exorbitant cost of law suits due to your illegal business? For more information, you may check with my PM in your inbox.