PayPal India now makes it mandatory for all Paypal users in India to add Purpose Code, PAN, Bank Account to withdraw money from Paypal. This is in continuation of its restrictions to comply with Indian Reserve Bank of India (RBI) guidelines.

Earlier only PAN and mobile number were mandatory and users were able to withdraw via cheque (limit of $2500 per month) without a purpose code. Now Paypal requires that you need to add a PAN number, compulsorily specify a purpose code identifying type of payment and specify a bank account number too to verify your bank transactions.

That meant a lot of small businesses and bloggers now had to disclose income sources, transfer money back to India and pay taxes on the newly declared income. This was a step by RBI to get more accountability of money transfer using Paypal in India.

The New Regulatory Update for Paypal India

In an email sent out to all Paypal India users

As part of our ongoing effort to comply with the requirements set out in the notification of the Reserve Bank of India (“RBI Guidelines”) that apply to all online payment gateways, all PayPal users in India will be required to add the following to their PayPal account in order to continue to receive export-related payments and withdraw money:

• A purpose code related to the majority of commercial activities for export-related payments
• A PAN or Permanent Account Number
• A bank account in India (if not previously added)

How To Add a Purpose code, PAN and bank account:

1. Log into your PayPal account at www.paypal.com/in
2. You’ll find prompts on the top of your “My Account” page asking you to “Add” your PAN, purpose code and bank account
3. Click on the “Add” links and follow the instructions.

Additionally, PayPal users in India are required to provide a current and accurate postal address on their PayPal account. Now the requirements are more tight as people find Paypal alternatives. Are you really happy with PayPal after these many restrictions ?