Your US client pays you through PayPal, the payment shows up in your PayPal account and you hit Withdraw. PayPal stops you and asks for a purpose code. Many freelancers pick the closest-looking code without checking it, and never read the fee table or learn that PayPal issues a FIRA for the bank trail.
PayPal in India is the route where you must complete KYC, set a purpose code and then withdraw to your Indian bank account, paying a published receiving fee of 4.40% plus 3.00 INR on INR commercial payments from outside India. After a withdrawal, PayPal can issue a free weekly digital FIRA. This post walks through the purpose code, the fees, the FIRA and how to keep it all matched to your invoices.
What PayPal asks Indian freelancers before the first withdrawal
PayPal's KYC help page lists your PAN, an Indian bank account, a purpose code and the nature of your business. An Import Export Code (IEC) is needed only if you deal in goods, so a freelancer selling services does not need one. You can receive a single payment under $200 on Lite KYC, and anything more needs full KYC. See PayPal's KYC help page for the current steps, since PayPal can change them. Finish full KYC before your first real client payment, not after it arrives.
Which purpose code to pick, and why a wrong one causes trouble
You must set a purpose code before you can withdraw to an Indian bank. It is a 5-character code that starts with P for inward money, and once you set it, it becomes your default for later withdrawals. PayPal's own purpose code help page gives P0802 as its example, for software implementation or consultancy. A wrong code can cause delays or compliance scrutiny, per the same page.
So match the code to the work you actually do. If your work is not software consultancy, do not copy P0802 just because it is the code you see in guides. Check the RBI purpose code list or ask your bank which code fits your service. Our guide to the purpose code for inward remittance goes deeper on choosing one.
What PayPal actually charges: the 4.40% plus 3.00 INR fee
PayPal's merchant fees page lists a receiving fee of 4.40% plus a fixed 3.00 INR for INR commercial payments from outside India. That page was last updated on 28 March 2024, so check the live fee table before you quote it to a client. A standard withdrawal to your Indian bank is free when no currency conversion is involved.
As arithmetic on the published rate for INR commercial payments, a payment of ₹1,00,000 carries a fee of ₹4,400 (4.40%) plus ₹3, which is ₹4,403. If your client pays in dollars, check which row of PayPal's fee table applies to you. Either way, build the fee into your quote. The guide to invoicing international clients covers how to price for it.
How the conversion markup works, and how to check it
When PayPal converts currency, it applies a margin over its base exchange rate, and that margin is a cost on top of the receiving fee. PayPal's fee page lists different percentages for different cases, around 3 to 4 percent above the base rate. Which one applies to your withdrawal depends on the case, so check the live fee table and the rate shown on the withdrawal screen.
To see what you are really paying, compare the rate PayPal shows with the market mid-rate on the same day, then work out the gap. Do it for your first few withdrawals. The comparison of Wise, Payoneer and PayPal for Indian freelancers shows how the three stack up on cost.
Is there a limit on how much you can receive?
PayPal's merchant fee page does not publish a per-payment receiving limit, so check with PayPal before a large invoice. Figures in older guides may no longer apply, so ask PayPal support or your bank what applies to your account before you invoice a large project through PayPal. Lite KYC is the one clear cap, since it covers only a single payment under $200.
The free weekly FIRA: where to download it
PayPal issues a digital FIRA (Foreign Inward Remittance Advice) free of charge each week from February 2026. All your withdrawals in a week are combined into one FIRA. To get it, go to Reports, then Tax, then FIRA, then Download. PayPal keeps copies for 12 months only, so download each one and save it with your records. Transactions before February 2026 fall under monthly FIRAs. PayPal explains the process on its FIRA page.
When you need a custom FIRA, and what it costs
If you need a FIRA for a specific transaction rather than the weekly bundle, PayPal offers a custom FIRA at 100 INR per transaction plus 18% GST for up to 20 transactions, so ₹118 each as arithmetic on the published rate. A bulk FIRA covering more than 20 transactions costs 2,000 INR plus 18% GST, which comes to ₹2,360. PayPal lists the turnaround as 3 to 5 business days for Citibank account holders and 7 to 10 for others. Whether a particular authority accepts a FIRA is for them and your adviser to say. PayPal itself only says most statutory authorities accept it, and the guide to FIRC versus FIRA covers the GST refund question.
Keeping PayPal receipts matched to invoices
Match each withdrawal to the client invoice it settles on the day it lands, and file the weekly FIRA next to it. PayPal combines a week of withdrawals into one FIRA, so one line in your records may cover payments from several clients. Note the invoice numbers against that week. Keeping this paper trail also makes year-end bookkeeping easier. For how to issue the invoice itself, see the GST invoice guide for freelancers.
Rinto lets you mark invoices paid and always know who owes you what, and see which invoices are overdue at a glance. Rinto does not process payments or detect them, so you mark each invoice paid yourself once the withdrawal lands. This post is general information, not financial or tax advice, so check specifics with PayPal, your bank or a CA.
Frequently Asked Questions
What purpose code should I use for PayPal in India?
Use the code that matches the work you were paid for. PayPal's own help page gives P0802, software implementation or consultancy, as its example, so that suits software consultancy income. If you do design, writing, marketing or anything else, do not copy it. Look up the RBI purpose code list or ask your bank which code fits your service. The code is five characters starting with P, and once you set it, it becomes your default. A wrong code can cause delays or compliance scrutiny, according to PayPal, so spend ten minutes getting it right the first time.
Can I receive PayPal payments in India without a purpose code?
PayPal makes the purpose code mandatory before you can withdraw to an Indian bank, so without one your money cannot reach your bank account. You set it once and it becomes the default, so the setup is a one-time job. You also need to finish KYC with your PAN and Indian bank account details. Lite KYC lets you receive one payment under $200, and anything above that needs full KYC. Complete both before a client pays you so the money is never stuck waiting on paperwork.
How much does PayPal charge to receive money from abroad in India?
PayPal's merchant fees page lists 4.40% plus 3.00 INR for INR commercial payments from outside India, as of the page's last update on 28 March 2024. On a ₹1,00,000 payment, that arithmetic gives ₹4,403 in receiving fees. A standard withdrawal to your bank is free when no conversion is involved. Currency conversion carries a separate margin over PayPal's base rate, listed at around 3 to 4 percent depending on the case. Fees change, so check the live fee table on PayPal's site before you quote a price to a client.
How do I download a PayPal FIRA?
Log in to your PayPal business account and go to Reports, then Tax, then FIRA, then Download. PayPal issues the digital FIRA free each week from February 2026, and it combines all your withdrawals in that week into one document. Transactions before February 2026 fall under monthly FIRAs. PayPal keeps copies for 12 months only, so download each one and store it with your invoices. If you need a FIRA for one specific transaction, you can request a custom FIRA instead, which costs 100 INR plus 18% GST per transaction for up to 20 transactions.
Does PayPal give a FIRC in India?
What PayPal's India page describes is a FIRA, the Foreign Inward Remittance Advice, available as a free weekly digital download or as a paid custom FIRA. It does not describe a FIRC on that page. If you need a FIRC for a particular purpose, ask PayPal support or your bank whether one is available for a PayPal withdrawal. Whether a FIRA works for your GST refund or other filing is a question for your CA or the authority concerned. Our guide to FIRC versus FIRA explains the difference.