Indian Interpreneurs (internet entrepreneurs) were seen outraged since last night when Paypal sent out an "Advanced Notice for Changes to PayPal User Agreement for India". Facebook and twitter are now resounding with screams of budding bloggers and small scale IT service providers voicing their anger over their inability to receive payments or purchace goods and services through the massively popular online payment portal - Paypal.

For the information of our readers I would like to list a few points as notified to us by Paypal.

Any balance in and all future payments into your PayPal account may not be used to buy goods or services and must be transferred to your bank account in India within 7 days from the receipt of confirmation from the buyer in respect of the goods or services; and
Export-related payments for goods and services into your PayPal account may not exceed US$500 per transaction.

Obvious enough, RBI and Income Tax department are trying to reign in tax evaders who receive online payment and spend them back on the internet. Such kind of income is not easily trackable.
To instantiate a case :-
I receive $600 in cash for a service through paypal and then Use the same to buy an iPhone. So that is no income as it appears to our IT system, while the case is not so.

There had been similar attempts last year around this time but it was latter brought back to normal. Some people might agree its a step in the right direction. But that definitely is not. Apart from hurting the livelyhood of thousands of budding young entrepreneurs its actually instigating people to evade further taxes.

This counter measure to track online income actually looks childish. If thats the best people at RBI and finance ministry can plan for us then I must say its time the oldies and incompetent be handed early retirement. How is this actually going to benefit anyone?

Instead why cannot we consider an option of this kind.
Workout an agreement with Paypal to divulge transaction details of Paypal users earning above $1000 a year.
Or make it mandatory for everyone receiving above $500 to file an IT return.

Why should the purchases be blocked?
What do they want to prove by limiting payments to $500? Is it that hard to figure out that multiple accounts can be created in different names to receive amounts. If you are looking at netting the tax evaders they are already smart enough. Instead you are only geopardising the careers and interests of our future IT generation.
When we have our leader stacking away their black money in foreign tax havens our laymakers give the struggling professionals a hard time while earning their livelyhood. What a country?

This is a guest article by Rooturaj Pattanaik, Director - NewDelhi SEO. The author is an E-Business consultant who helps small business startups take shape and flourish on the web. He can be contacted at @rooturaj.