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January 31, 2011

RBI Restrictions For Indian PayPal Account Holders

Filed under: Service — Tags: , , , , — Neetu @ 1:56 pm

PayPal is the safer and easier way to pay and get paid online. The service allows anyone across globe to pay through credit cards, bank accounts, buyer credit or account balances, without sharing your financial information. But If you are based in India and have been using the PayPal service to receive payment from foreign clients and advertisers, here’s some bad news for you.

paypal

PayPal has given its Indian customers, a 30 day advance notice on changes in user agreement for India. PayPal announced changes in its payment to Indian transactions, following are the guidelines issued by the Reserve Bank of India which will come in effect from 1 March 2011

You will not be allowed to receive export-related payments for goods and services into your PayPal account that exceed $500 per transaction.

You won’t be able to keep money in your PayPal account, which means all money received into PayPal must be transferred to your Indian bank account within 7 days.

You will not be able to buy goods & Services using the money that’s in your PayPal account.

You must want to know why RBI have imposed these guidelines

There are number of freelancers who get paid directly in there PayPal account from there foreign clients. As per the Indian Taxation system “Companies residents in India are taxed on their worldwide income arising from all sources in accordance with the provisions of the Income Tax Act”. But till you won’t declare the amount received or transfer that money from your PayPal account to your Indian account, the Indian tax authority won’t have get a clue about it. RBI has imposed these guidelines to make sure the income received into PayPal account should be transferred to some other account, so that people will be forced to transfer there earnings and report the same during tax return. It also help them to keep check on illegal foreign flow of money.

Read the detailed announcement on PayPal.com or Fill Petition To RBI for the $500 PayPal Restriction

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