Paypal India Users Need Purpose Code to Withdraw Money

The Paypal India fiasco is continuing. Now Paypal has informed Indian users withdrawing money need to fill out a new field “Purpose Code’, which is now required under Indian laws in order to identify the nature of cross-border merchant transactions. This is not the IEC or export code everyone was blogging about.

Some key implications now are that Indian PayPal users are no longer able to receive personal payments and your  customers now have three options to pay you by using the Pay for Purchases (Goods or  Services) tab, completing PayPal checkout at your website or responding to PayPal “Request Money” instructions (invoices).

Paypal enlists a long list of Purpose codes. These match with the  New Purpose Codes for Reporting Forex Transactions-Receipt Purposes on the Reserve Bank of India website. If you check the list, it seems  Bloggers will need to use purpose code P0805, under the category Content and Journalism described as News Agency and Subscription services.

What is unclear is that if you simply receive advertising income and send out free new updates, how can you be exporting your service. Paypal is only allowing withdrawls for export of good and services, and as before I am still skeptical if this would invite service tax burden under the the Export of Service Rules, 2005 on those who will now come under the RBI scanner.


  1. Sarbjit Singh says:

    I think Paypal is going to lose its user base in India. Though they have to comply to RBI regulations, they have failed to manage things professionally. Bloggers in India will have little or no options to work with clients who send Payments via Paypal.

  2. Sourish | Friendly Blogs says:

    Ok, anyone try withdrawing some money and let us know :P

  3. Mahendra says:

    an user can any field he/she wish so. I don’t think that RBI have a capacity to watch it. entire process was totally useless.

  4. Sourish | Lets Start A Blog says:

    Hi , i just received my money from paypal in my bank account and blogged about it. hope you will like to see :

  5. çiçek says:

    Thank you very much for sharing I wish you success

  6. Fullbellek says:

    great work! thanks..

  7. Zonia Tadena says:

    This is a good piece of writing, I was wondering if I could use this article on my website, I will link it back to your website though. If this is a problem please let me know and I will take it down right away.

  8. Haber says:

    Without such a development could not have online shopping paypal ..

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