For people in India who are using Paypal as their payment processor, there is a bad news. We know that there are many online earners here in India that use Paypal to receive and send payments. Ebay sellers, freelance writers, online teachers, PTC earners, and others usually use Paypal to accept or send payments. So, the new rules will definitely hurt these people badly. What are these new rules?

Last night, I receive an email from Paypal informing its Indian account holders about the following changes:

1. Any balance in and all future payments into your PayPal account may not be used to buy goods or services and must be transferred to your bank account in India within 7 days from the receipt of confirmation from the buyer in respect of the goods or services; and

2. Export-related payments for goods and services into your PayPal account may not exceed US$500 per transaction.

I believe that these changes are in connection with the recent issues of black money that rock the country. However, what I don’t understand is that why these legitimate online earners have become the target of these restrictions. I understand the position of Paypal as they are only following the guidelines from the RBI.

With these new rules which will take effect on March 1st, online earners must withdraw their earnings within 7 days even it does not reach Rs7,000 which will cost them Rs50 withdrawal fee. For example, a freelance writer who just accepts occasional writing job and in 1 week earns $10. Usually, online earners would wait that their Paypal funds would reach the equivalent of at least Rs7,000 before they would withdraw to their bank to save at least Rs50 Paypal fee, but now, they must earn that much within 7 days so that they could avoid the Rs50 withdrawal fee.

Another problem is that, these changes will cost much for people who buy goods and services online. Usually, if you would fund your Paypal from credit card or bank, there is a service fee, but if you would use your Paypal funds which you earn online, you will be saved from those service fees. Now, you cannot use your Paypal funds but instead you must fund your Paypal directly from your credit card or bank. Whatever earnings/funds you have in Paypal, you must withdraw them. It’s ridiculous, right? It’s double tax. Tax for withdrawal by paying the Rs50, and then another service fee for using the same money going back to Paypal if you’ll use it to buy online.

I have Paypal account but I just use it to purchase online so I am not really affected by the changes, however, I do feel for my fellow Indians whose bread and butter comes from earning online. These will be a big blow for them. There was a change implemented before which was adding the tax information to the Paypal account, I think that one was fine. But now, the RBI are barking at the wrong tree. These tax-evaders and money launderers do not belong to these online earners. Please spare them with these non-sense rules!

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16 Comments on Paypal New Rules for Indian Accounts

  1. Ravi says:

    What will happen if i didnt withdraw funds ? As i didnt earnd them for goods and export service.

    • Amartya says:

      there has been no clear instructions on what will happen to the funds if it is not withdrawn in within 7 days. that is also the question that I am searching for an answer. I have not found a policy update regarding this in paypal site.

  2. Amartya says:

    i haven’t faced problem with paypal, and i hope i won’t

  3. […] to all their users today regarding the policy update which will take effect on June 12, 2012. The policy update is in the User Agreement for Paypal Services section 3, Additional Fees. Previously, the currency […]

  4. Andrew Meli says:

    Refund My 1100$ To My AccounT You Guys Have Raised The Stakes 2000 More Yous Guys Raise the Price You Void The Contract The Contract Can’t Be Modified From 9/6/13 . It States That This Contract Can Not Be Modified But You Said That There Might Be A Slite Increase For Taxes. I Am The Seller Not The Buyer. He Should Pay The Taxes Not The Seller. Do The Right Thing And Refun My Money 1100$ Thank You. Andrew Meli

  5. Andrew Meli says:

    On 9/6/13 Your Statement Said That This Amount Can Not Change. So Be It On The Same Contract Page You Guys Modified A Large Amount Of 2000$ That Is A BReach Of Contract.This Contract Dated 9/9/13 Ask For ALarge Amount Therefor You Owe Me Refund Of 1086$ To Be Put In My Account Immediately.Thank You Andrew Meli

  6. apna tapno says:

    help me here plz. I’ve linked my bank ac to paypal. N something is written there like “indian user neither send or receive money in case of crossboard transactions”. Now i’ve to pay one person 97$ to get access to a service. So tell me is it possible to pay n receive money from outside india ????

    • deartz says:

      Hi, Apna Tapno. It is possible to send and receive payment from and to India. When receiving money through Paypal, it will be automatically deposited to your bank account at the end of the day. You can send money through Paypal by card or bank. You’ll not be able to use your Paypal money to send payment as it will be automatically transferred to your bank.

  7. apna tapno says:

    m stuck here. My bank a/c is added without any prob…..but it isn’t accepting my pnb debit cum mastercard….it keeps on saying “we are unable to verify”.

  8. apna tapno says:

    I need a regular indian paypal user who can guide me like which bank sud I associate with paypal, what type of card shuld I use…???
    someone help please.

  9. pranathi says:

    i have added my sbi bank account number in paypal…but for confirmation paypal will send 2 small deposits within 4-6 days..but i didn’t recieve deposits already i have been waiting from 2 weeks..i dont knw whats the problem..i have asked the bank also…can anybody pls help me

  10. GITIN says:

    I Created Paypal account,its limited
    reason was that i alreadu had an account which is created by the same computer,that account also has been blocked,money has been sealed for 6 months
    is this good ?
    becoz i dont even recve any email about it

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