Well, everything that you have said is right but i just wanted to elaborate on certain points. First is why RBI doing this? This is because paypal is a bank and all banks operating in India are under RBI, its the statutory body that has right to formulate and enforce rules with regard to banks. Second is govt. always knows about every transaction we make, we may not know, that they know but nevertheless they know. So, if you are under any misconception that 'now they will know' come out of it. Third is there has been a lot of increase in online money transaction and till now the conditions were such that they could easily be maneuvered and misused for funding terrorists (which we all know is a big problem), so they are tightening the noose around them. Fourth is PAN is necessary for every transaction, when you go to an employer in flesh and blood, they ask you your PAN and here, since our employers vary, so it would be different (almost impossible) to make it obligatory on them, and so they made it compulsory with paypal because no matter with whom we work, finally the money has to be deposited in there.