Making Money Online in India gets tougher

It has been only a week since PayPal India stopped processing all money transactions to personal accounts in India. They have also blocked the withdrawal of available funds. Apart from receiving the AdSense checks, most of the Indian bloggers and freelancers would have used PayPal for online money transfers and hence the future of their hard earned money remains uncertain.

A lot of people think that making money online in countries like India is a really easy to do thing. Indeed, it’s so easy to get started but with all its related risks (Read Online business risks) and a lot more related uncertainties.

Online Business Models

Most online money makers in India (and several other Asian countries) work mainly around the following business models

  • Blog on internationally accepted topics and drive US traffic and earn money via advertisements (mainly AdSense and sometimes other networks and private ads)
  • Writing services and other related freelancing opportunities
  • Specialized services – graphics, banners, themes, other web development services
  • Selling goods via eBay
  • Online forex trading etc

As far as I know, not many Indians are keen on doing affiliate marketing or any MLM stuff. However, even for the most harmless (and capital investment free) areas such as blogging to make money online there are hurdles and ongoing issues.

Main hurdles and issues

When it comes to one’s online rights, India is not as bad as China. Nobody really blocks or censors websites in India. However, there are other areas where policies – mainly from the government – prevent people from doing free mode online business from India.

The main issue here is the strictly controlled foreign exchange policy. I would assume that the recent PayPal issues are mainly around the RBI (Reserve Bank of India)’s guidelines related to the foreign exchange policy. Due to the same reason, even online currency trading is not possible from India. All that is legally permited is the futuress trading of currencies – that too only USD-INR pair on wide spreads.

The high rate of Income tax is another key issue that freelancers pay here assuming that they are paying taxes in India for their online income. The rate of income tax is 30% for the higher income groups and to make it worse due the huge difference in USD buy/sell rates, most people end up loosing a lof of money in exchange rates as well.

Ban from the major online income contributors such as Google AdSense is another big issue. Most of those people who get banned by AdSense are from this part of the world (many for valid reasons, I must add, but not all).

Lack of proper cyber crime enforcement is another big issue here. Usually, only when some high profile issue happens, the cyber squad gets into action. If somebody is hacking to your online accounts or even defame your online business’ goodwill for that matter, nobody really cares.

Way forward

In my opinion, if you are completely depending on your online income to support your financial needs, you may need to think twice now. It’s not going to be very easy for anyone to continuously innovate and sustain the online income models. Online business (especially blog income) can be thought of as an additional income but never the only thing or primary income stream that you should be banking on. It’s time to find an offline regular job, if that is not the case already.

Happy Money Making!


  1. That sucks that you cannot use adsense or Paypal, but you have such a huge market even just in your country – that a lot of us cannot access.

  2. That you cannot use adsense or Paypal, but you have such a huge market even just in your country – that a lot of us cannot access.

  3. Ajith,

    I have lots of $ in my paypal. I think you might be in the same position.

    Is there any way of getting the amount withdrawn from Paypal.

    Did paypal mentioned that in future they will remove this ban?

    May be we have to spend the amount in our paypal accounts 🙁

  4. I have to disagree on a couple of points. I know a handful of people who make money via affiliates, its not so rare in my circle.

    Paypal would fix the stuff in a matter of weeks hopefully, plus even if it shuts down, there will always be another way out.

    The internet market is yet to bloom in India, most companies are still doing everything offline. They are yet to realize and use the power of Social Media etc etc.

    IMO, Online Money Making is still a good option, if you know what you are doing I don’t think any of these is a problem.

    • Arun, it’s for sure that the internet market in India will boom in the coming years. And making money online within the legal limits (e.g. AdSense income that pays in Indian rupees) is still a valid option.

      The biggest problem is that, what you have just seen in the form of PayPal issue is just the tip of the iceberg. Many people earn money in USDs and they get it easily transferred to their Indian bank a/c. In my thinking not everything is clean wrt this and it may be conflicting with the FERA norms. On top of this many do forex trading from India which is totally illegal. And the worse, I do not know how many of these big online earners actually pay income tax. I have a feeling that the RBI may go very strict on freelancers and the USD earning opportunities soon enough.

      [ I still haven’t seen too many people from India who made it big with respect to affiliate marketing. Perhaps I would need some references 🙂 ]

  5. PayPal must find the solution early before its too late… online users might start looking for some alternatives

  6. Thats bad, what is happening I had no idea. Last month it didn’t accepted my debit card.

    Huh! Need a solution.

  7. I have to admit that I don’t quite get why Paypal ceased processing the payments, but they did say it was temporary.

    As to the rest of it, I think people come up with scams all around the world, including India & the United States. What you have that we don’t quite have are big numbers of people and poorer people who are able to gain access to computers that doesn’t happen here. So, you end up able (odd term) to perpetrate some scams that we can’t because of access.

    All of us who try to do the right thing keep asking why these people who seem to have the knowledge to do almost anything else apply their talents towards breaking the law. Makes the rest of us have to work harder to be trusted.

    • @Mitch, PayPal has been very harsh here something that wouldn’t have happened in countries like US. However, I think the smart people would have already withdrawn majority of their money as and when it came in. People like me, where blogging is more of a pastime, didnt bother to do so and hence suffering.

  8. This is really surprising to me that paypal would be able to just cut off like that. I deal with a lot of people from India who work in SEO, doing link exchanges and what not and I wonder if this will affect them.

  9. Hi Ajith,

    I heard that Paypal has stopped receiving funds as gifts in India, and returned the funds to the sender.

    But it’s shocking to hear that Paypal has stopped money transactions in personal accounts. I have a Business account and i don’t have any problem with Paypal.

    Is there an option in Personal accounts so that they can upgrade to Business accounts ?

  10. I hope AleartPay take proper action this time to take on PayPal.

    Tax is a big issue here. 30% tax is almost half of our hard earn money. Our Government have to introduce proper infrastructure in this.

  11. I dont understand why Paypal have to do this. I live in Philippines and I hope they don’t block it here in the near future.

    • Philipines economy is a little more open to foreign funding I think. In India they have too strict rules. e.g. Nobody can do forex trading except against USD futures. I think, you dont have such limitations there.

  12. Good point towards the end Ajith.

    About PayPal, have they put withdrawals back in place? I have requested a money withdrawal to my bank acct yesterday and they didn’t show up any error message.

  13. very nice post on blog

  14. Hi,

    Can anyone help me on this, recently I received payment in my Paypal account and I came to know that there is some issue between RBI and Paypal.
    Now I want to withdraw my money, please let me know how Can i withdraw money, Is it safe to send my money from paypal to any USA paypal account holder how is my friend and I am asking him to withdraw and transfer that amount in my bank account.

    Please help me o this..

  15. Hi,

    The paypal issue will be resolved soon.You can make huge profits if you know how to properly market things online .I realized about it after experiencing affiliate marketing and information marketing.

  16. true…because many advertising giants like adsense make their rules and policies very stringent, reduced their revenue shares these days and many affiliate networks don’t want to extend their horizon beyond north america…these factors contribute a lot on not making money online

  17. I have just started my blog and looking this year to get money through paypal. This news is a bit shock to me. I hope RBI soon comes out with a solution soon as there are many big and small online money makers from India.

    • Kavita,
      In order to be successful in online money making you have to keep digging alternate options – One cannot just depend on one vendor or source of income.


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