Paypal has yet updated their policy again in compliance with Indian Regulator. According to new policy, Money received to your paypal account from export of goods or services should be withdrawn to your local bank account within 30days stating the proper reason. You cannot use the money in your paypal account to re-purchase any goods or service.
See the mail from paypal for reference.
In compliance with Indian regulations, if you are selling products and services to customers globally, please review the following important information:
• Any proceeds or earnings received into your PayPal account from the export of goods and services should be withdrawn to your bank account within 30 days.
• While making the withdrawal please make sure you select the purpose code that best fits your business.
• Any proceeds or earnings received into your PayPal account from the export of goods and services may only be withdrawn to your bank account in India. This received amount cannot be reused for making purchases.
• If you would like to make purchases on any website that accepts PayPal, you can continue to use any credit card issued by a bank in India.
For any questions, please reach out to our customer support teams by following the steps below:
1. Log into your PayPal account
2. Click “Contact Us” at the bottom of the page
3. Click on “Send Us” an email or “Call Us” to reach us by phone
We cannot thank you enough for your continued attention and patience.