Very recently, PayPal sent you an email to its customer base in India that the company will charge 18% GST on paypal services in India effective from October – 2017.
The bigger issue is that each and every transfer of funds from your PayPal account to your bank account will require a separate FIRC.
PayPal which is used by pretty much all the freelancers and web developers to sell to global client has mandated the new rules from October 2nd.
Typically, freelancers do 100-200 transactions every month (ranging from $10 – $1000). Each FIRC costs Rs. 200 (+ 18% GST).
There is a fee of INR 200.00 + 18% GST per FIRC certificate charged by Citibank (i.e. per transfer from PayPal to your bank). For merchants with a Citibank account, this fee will be automatically deducted from the bank account. Merchants without a Citibank account will be required to submit a Demand Draft of the fee amount in favour of ‘CITIBANK INDIA NA FIRC CHARGES’, payable at Mumbai together with the FIRC request letter.
That is, for each and every transaction !!
So what is a freelancer job going to be post October 2nd? File FIRCs (which is a painful process and many banks aren’t even aware of the process).
If you’re a freelancer who’s working online and you’ve ever been paid through Paypal, you will be required to either file FIRCs (Which are near impossible to get in my own experience), or you will have to pay 18% GST from your own pocket even while you’re exporting and legally exempt.
If this goes through as-is, this will destroy the freelancer market in India. Doing business from India cannot be this tough.
Freelancer community has started an online petition to urge RBI to look into this. Please go ahead and sign the petition.