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Comment by yashg | Hacker News Reader

Right, so they'd rather have companies incorporating in other countries for the sole purpose of being able to collect money from their customers! Seems legit.

For instance - http://blog.freshdesk.com/how-to-incorporate-a-us-corporatio...

That's an even better way to save taxes. Delaware has 8% tax. India has 30%. People won't even bring the money in India.

RBI is treating PayPal as some swiss bank account. Keeping all the USD balance in PayPal doesn't make sense. I have to bring the money in India because I need to pay the bills and salary and all. And the PayPal balance doesn't earn any interest. But when I have to pay the hosting charges or domain registration charges which are in USD why should I not be able to use some money from my PayPal account which is already in USD? RBI insists that money first come to an Indian bank and then used for paying abroad. Again costing me conversion fees every time the money crosses the border.

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Its not just the black money, its consumer protection that the Government is keen on.

India Government just wants Paypal to behave like a bank if they are going to hold consumer;s money. If Paypal follows the regulation, they will end up paying interest on the money they hold. And they will forced to insure the amount.

And paypal works around this issue by pushing the money to consumers bank when it reaches the legal limit.

You can't blame the Government for this mess. Its Paypal that is working around the system.

Paypal is not working around the system: they are simply not a bank. They are a payment processor. Just think about what would happen to the fees that he already complains about if they had to insure the deposits.

And a payment processor should not hold the customer's money for a longer duration. That is what the Government is trying to push them into complying. Just like any other payment processors operating in the country, Paypal can also keep the money with them for just enough duration that is required to process the payment. After that they need to TRANSFER the amount and not hold it with them.

If the India Govt relaxes it for Paypal, multitude of such payment processors would start operating and one day you would see them disappear with people's money. Then again you will blame the Govt.

>>Right, so they'd rather have companies incorporating in other countries for the sole purpose of being able to collect money from their customers! Seems legit.

Software companies != Entire Indian economy. Software is relatively recent and accounts for a little part to move economic conditions of larger Indian masses.

Also at a time when every one is coming to India to set up shops here, no one is going to move out. That was a good Idea probably in the 1980's. Not any more.

Given say 20 years of future from now. The Indian market has more room to grow that the US. I would even go to extent to say, any one who is moving out of India now is making a very big mistake.

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