Name change is a simple procedure. You have to get the change published in the Gazatte, providing necessary documentation. After a 30-day period, it will be changed. Honestly, what you are facing is the end results of computerization. Under that, it may not be possible to maintain multiple identities, may it be just the use of initials in some documents, full names in others. Frankly, the Income tax guys are cracking on multiple identities
As I have mentioned in another post here, Income tax department, banks, Pay Pal, passport office ---- none of them will accept a name change unless you make the change in the gazette. You could try the trick that Vijay has suggested---since this would be to get you paypal account working---but in the long run, it may be best for you to standardize the name, so that you don't keep facing similar problems again and again. As for criminal action by the IT department, I doubt it. For tax (and police too ) you are identified not only by name but by the address, son/of, etc etc etc.... I don't think you will have problems if you follow due procedure (publish name change in government gazatte) and attach the papers for the tax department to change your name in its records.
Are you sure that once I change my name in PAN card it will work? Because the IT department will not change the PAN card number and so if they are using the 5th character for verification it won't work. If they are actually checking the IT database, then it would be no problem. Can somebody let me know because PayPal's support in this issue is pathetic.
I've applied for name change in the PAN card because it had reversed my firstname/last name. You need to send Form 49A (name and details change) with proof of identity and proof of address to the IT department. Gazette name change is not needed if you have proof of ID with the correct name you requested and you're not totally changing your name to something else.
I can confirm that Paypal accepts PAN number without a hitch after I got my name corrected in the PAN card through form 49A of the Income Tax department.
Some people are experiencing the problem of PayPal not accepting valid PAN numbers with exactly same names.