Guys, I transfer $700 each from my paypal to my Local Bank which in India. Should I pay Income Tax return for this amount? Any suggestion would be appreciated.
Yes, you do. It's not the fact that you transferred the money into your Indian bank account which makes it subject to Indian income tax, but the fact that you earned the money while living in India. Even if you transferred the money to a US bank account while living in India, you would still have to pay Indian income tax on it. You also have to pay taxes on it even if you leave it in your Paypal account. It's the income that's taxable, not the bank transfer. See my answer in this similar thread: http://forums.digitalpoint.com/showthread.php?t=1556832