Looks like the recent PayPal India chaos – whereby the personal account holders couldn’t withdraw money to Indian banks – has come to an end! When I tried to withdraw money to my bank account last week, it asked me to declare a purpose for the proceeds received through PayPal (See the screenshot below).
This is definitely a great move. As I have always maintained, the online income earners need to comply to government rules and regulations while making money. In principle they are bringing in foreign exchange (Forex) to India that’s not accounted for and sometimes not taxed.
New requirements by PayPal India
The purpose of withdrawal of money – or in other words source of income – needs to be declared only when you withdraw funds. The following are the reasons available as options now and they have a beautiful description of the same in a help screen. Bloggers are supposed to choose Freelance Journalism as per the description given there in.
In addition, as of yesterday each PayPal India account holder needs to provide the following information to keep your PayPal account active:
1. Your Mobile phone number
2. Your PAN Number
At the moment, they seem to allow skipping this screen but I am sure this will be made mandatory soon. The mobile number will be used for clarification by banks as how the money was earned and the Income Tax PAN (Personal Account Number) id will be used to track your income records and financial transactions.
[There is a bug in the screen that asked for the PAN number. Last night I entered my PAN number but it did not accept it stating that the format is not correct. Looks like they are still testing or fixing it]
What does it mean to bloggers and Internet Marketers in India?
Well, many student bloggers may not have a PAN number yet and some of them who are not adults yet will not be entitled to have one. In principle they cannot use PayPal in the near future.
Those who are already having a PAN number, can now conform to RBI regulations and be decent Indian citizens to pay taxes for everything that they earn. I know a lot of them won’t like it but that’s what you are expected to do. Evading taxes won’t help you or the country!
If you think that you can now switch to other online payment mechanisms, even they will be forced to conform to RBI rules soon enough. Moreover, I feel that all those online forex trading sites will be monitored for their illegal activities from the Indian soil (I hear have some of them have customer relationship offices in India)
In principle, be decent and pay taxes for whatever you earn online!
I am Happy!
Being somebody who pay income tax for each and every rupee earned – via employment salary, online income, bank interest, capital gains etc – I am really happy with this move by RBI. Such norms and rules are required to make our financial system stronger and well regulated which is one of the reasons why the Indian economy didn’t quite have a recession while others suffered! This will also help all of us to become good netizens!
Happy Money Making and Don’t forget to Pay your Taxes!