According to the latest update from Paypal, from March 3rd, Indian entities will have only to fill out a 'Purpose Code' which defines the purpose of the payment made to them. It appears that the RBI will still not know who is making the payment, only get an indication of the purpose of the payment from the receiver under the laws of India in order to identify the nature of cross-border merchant transactions. What is not clear, and we've requested Paypal for info on this, is whether businesses will not require an Importer Exporter Code (IEC), which they had mentioned earlier. So you can go ahead and pay the Indian mafia extortion money under Purpose Code "P1006" (management services), and nobody will ever know? Perhaps not: Paypal does say that "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." Technoholik rightly points out that "the onus of verifying whether the services rendered fall into the categories listed, falls back on the financial/government agency that choses to investigate someone whose bank accounts are showing suspicious amounts of foreign money coming in via PayPal." Paypal expects the full amount of the original withdrawals to be restored in the accounts by the end of the week. For personal payments, though, transfers are still not kosher. Users will have to complete their withdrawals by cheque. Purpose Codes: Code Category…
