PayPal is widely known to be an easy way to collect money from affiliate and advertising programs and payment for freelance services. The money collected in PayPal account then can be transferred online, to the users' bank account.
Sometime during early February, PayPal had officially announced that the RBI (Reserve Bank Of India) had intimated them that they required specific approvals to allow personal inward remittances to India, which PayPal did not have. So till the time PayPal obtained these approvals; all personal payments into India remained suspended. However, if the PayPal user from India was an exporter, they would be still be able to use PayPal for payments of goods and services, but PayPal will not provide users with the IEC (Importer Exporter Code) to withdraw payments to their banks accounts. Instead, the users will have to apply for it themselves and the process in itself might take several weeks as getting the IEC is not an easy task.
Now, it appears that PayPal is resuming their services, but with some new features.
According to the new rules specified by RBI (Reserve Bank of India), the PayPal management has included a new field called the “Purpose Code”. Basically, this code allows the banks to identify the nature of the cross border bank transaction. It is also to be noted that this is clearly different from IEC (Importer Exporter Code). The new withdrawals will require users to use a Purpose Code while withdrawing money to their bank accounts. So, if you received payments for your website or blog, you need to use Freelance Journalism as your purpose code.
Besides, you don't have to make any real efforts to get a Purpose Code. PayPal has provided a table in their post to confirm your Purpose Code. You can either choose your code according to your business category or confirm your code from PayPal’s customer support team.
After logging into your PayPal Account and selecting the ‘Withdraw Funds’ option, you would be then asked to fill out a new field titled the Purpose Code. Select the code most appropriate for your nature of business and proceed. More details on purpose codes can be found by clicking here.
Further info on same can also e found here.
Users are advised to choose their purpose code accordingly, so that you do not get into any trouble later. There will also be a limit on the amount that the user can withdraw before which they will be required to produce receipts or invoices and their PAN card. PayPal has also not explicitly stated how much the upper limit would be before the Indian user would require additional documents. However, it is believed that this would more likely be not more than Indian Rupees 50,000, as bank deposits above this limit require users to produce their PAN cards.
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