As most know by now Paypal had blocked payments to Indian banks and users as per directive from RBI. Now it has announced that the paypal payments i.e. withdrawals to Indian banks will be back on 3rd March but with certain terms and conditions. Most blogs reported that an IEC code would be required by users to transfer their funds. But thats not the case. Paypal clarifies that a purpose code (which is different from IEC) would be required to transfer the funds to one’s account.
A Purpose code would be required for all withdrawals to Indian banks. What’s more based on the value of withdrawal and the purpose code in your declaration, your bank may require you to provide documentary proofs such as invoices / goods receipt forms as applicable to reconcile with your withdrawal.
Paypal has posted a table with the Purpose codes on its blog. We are reproducing the same here for our readers:
| Code | Category | Description | Who should be using it |
| P0101 / P0104 | Export of Goods | Value of export bills negotiated / purchased/discounted etc. (covered under GR/PP/SOFTEX/EC copy of shipping bills etc.) | eBay merchants, jewelers, sellers of collectibles and other such products through eBay and your own websites / catalogues globally.Please note: Cross border shipment of goods and services for which you file GR / PP / SOFTEX / EC forms only should be processed with this code. Use P101 if Deutsche Bank is your banker and P0104 if you bank with any other bank
If you have any questions, please check with your bank to help you with the same. |
| P0301 | Travel , Hospitality and Tours | Purchases towards travel (Includes purchases of foreign TCs, currency notes etc over the counter, by hotels, hospitals, Emporiums, Educational institutions etc. as well as amount received by TT/SWIFT transfers or debit to Non-Resident account). | Online Travel Agents, Airlines, Railways, Buses, Taxicab Services, Hotels, B&Bs and other travel / tourism related sales through PayPal |
| P0801P0802
P0803 |
Information Technology | Computer Information Services. Hardware / Software / Data Processing consultancy/implementation | If you are an independent / freelance coder / hardware consultant or data processing service provider, or a small business providing such services for websites globally, please use these codes.For all IT related consulting services where you know you do not need to file a SOFTEX form, please use the appropriate code. 801 for hardware consulting, 802 for software consulting and 803 for data management and processing consulting services |
| P0805P0806 | Content and Journalism | News Agency and Subscription services | If you are a freelance journalist / blogger / news aggregator please use this purpose code for withdrawals.If you are a newspaper or an online news aggregator for websites overseas, please use the appropriate code from these two. 805 if you a freelance journalist, and 806 if you are a newspaper / aggregator |
| P0902 | Licensing of creative works | Receipts for use, through licensing arrangements, of produced originals or prototypes (such as manuscripts and films) | Artists, designers, other creative service providers where the principal revenue mode is license fees, please use this code.If you produce creative works which you license out for entities overseas, licensing revenues may be classified under this purpose code |
| P1004 | Other services | Legal Services | If you are providing outsourced law related services |
| P1005 | Accounting, auditing, book keeping and tax consulting services | For accounting consulting and accounting services | |
| P1006 | Business and management consultancy and public relations services | Management / brand consulting and management services can be exported with this purpose code | |
| P1007 | Advertising, trade fair, market research and public opinion polling services | Marketing/ brand consulting / logo design / event management services can be exported with this purpose code | |
| P1008 | Research & Development services | If you are an outsourced research and development services provider based in India, receipts can be inwarded through this purpose code | |
| P1009 | Architectural, engineering and other technical services | Any other technical services such as eTutoring, education and other services you render over the internet via web conferencing tools or similar channels, please use this code for your withdrawals |
What if your transaction doesn’t fall into the above codes?
Well you have bad luck my friend as besides for the above any other transaction cannot withdraw money from paypal even if you are a charity organization. But you can possibly ask for the payment in check though direct transfer to bank account wont be possible.
This is nice news for all the Indians and most of Sri Lankan paypal users becuase Sri Lankan users register by a Indian address because paypal doesn’t support sending money to sri lankan accounts.
Thanks for the information. I came across this Post on Labnol.org that Indian Paypal users will have to register for Exporter Codes. What is it!
it’s good to re strcture the model of orgnisation strategy acording to contry laws…………
It simply means you can transfer 500 crore rupees to switzerland but if you are a poor Indian and want to send or receive 50 rupees you will need 30 types of clearance from RBI headquarter in New Delhi.
Can i become an politician because then i can presonally transfer 500 crore to switzeland and who will dare to touch my coller neither the the great CBI nor RBI or any other law maker dare to ask me any questions and i can personally open one payment gateway to india where i can transfer unoccuntable money to my account as in india ministers and politicians are the maker and breaker of law
this was long pending. Paypal payments if not tracked could possibly become a source of sending money to fund illegal activities.
Good that RBI intervened and added certain regulations atop it.
Paypal works great for me and the legal recognition via the regulatory measure is actually a good thing.