Ok, so after all that brouhaha over withdrawal of funds from Indian PayPal accounts, the matter seems to have been resolved for now. PayPal has complied with directives from the RBI on compliance issues regarding settlements for export of goods and services.

From now on, when you want to withdraw funds from your PayPal account, you need to fill in a new field called ‘Purpose Code’, as explained by Farhad Irani on the PayPal blog. This is intended to help the RBI determine the nature of cross border transactions and it is likely that you may need to provide copies of receipts and invoices as and when required.