The Internet has evolved from a network of computers to a global social phenomenon. Once a medium that offered access only to a few, the smartphone and mobile network revolution has thrown it open to a much wider and more varied audience. In the process it is transforming itself from a place where people exchange information to a place where people conduct business as well. The convenience provided by online business transactions – e-commerce – is the reason why more and more users are turning to the Internet for their buying and selling. This is not only changing the face of retailing and rewriting the rules of the game but also throwing up new challenges to the legal, policy-making and taxation fraternity at a pace that they are ill-equipped to deal with. This paper presents some of the major conceptual characteristics of e-commerce and the legal and taxation challenges that arise therefrom. It then suggests the approach that could be adopted for tackling these legal and taxation issues.