Paypal Impact On Indian Freelancers

There are many freelancers in India who earn descent income via Paypal - the top way to transfer money online. However, RBI has imposed new guidelines that will now make Paypal close to useless for users in India. Read about it here : #-Link-Snipped-#

Those who're not aware of the issue, let me tell you what exactly has happened and why RBI did the changes to the policy -

If you're a freelancer from India and you got paid $250 for your services from your client in Europe. Now, you could simply keep the money in your paypal account and use if for your online transactions OR withdraw that money to your bank account OR use it to make purchases online. In such a case, Indian Tax Authorities will have no way to find out how much you earned and how much to tax you.

With the new guidelines you -

1. Should withdraw that money to your bank account within 7 days of receipt.
2. Should not get any inward remittance exceeding $500
3. You will not be able to use money in your Papal account to buy any goods online - if you must use PayPal - you will have to use your bank's credit card to transfer the money to Paypal.

All this ... to make it easier for RBI to keep track of your payments and tax you accordingly.

This is going to impact the freelancers in a big way. There are many startups that offer services and get paid primarily through PayPal. There are paypal alternatives available at present however it's just a matter of time that RBI will impose similar restrictions on them as well.

Are you a freelancer, startup affected? We'd like to know your views.