How much tax does PayPal charge
PayPal does not charge tax on payments; it charges transaction and currency conversion fees, typically 2.99% to 3.49% plus a fixed fee for standard domestic business transactions.
What a seller or sender pays depends on whether the payment is domestic or international, whether it is a business or personal payment, and whether a currency conversion is involved.
- Domestic goods and services: PayPal takes 3.49% or 2.99% of the transaction amount depending on the merchant tier, plus a fixed fee of about $0.49 USD or the local equivalent per transaction.
- Cross-border fee: International sales carry an extra 1.5% on top of the standard merchant rate.
- International business accounts: For business accounts in countries such as India, a flat 4.4% transaction fee applies to international payments.
- Currency conversion: When PayPal converts money between currencies, it adds a markup of 3% to 4% above the base exchange rate.
Personal payments are priced differently from business payments:
- Friends and family: Domestic personal transfers are free when funded from a bank account or PayPal balance.
- Card-funded transfers: Paying with a credit or debit card adds a percentage fee and a fixed fee, or a flat international sending fee of up to $4.99 USD.
For an Indian business receiving money from abroad, the 4.4% transaction fee and the conversion markup both apply, so the combined deduction is larger than either figure alone. Reading a PayPal overview alongside the fee pages on PayPal's own site helps confirm which rates apply to your account type and country.
Some of the options Indian businesses look at for receiving international payments include:
- PayPal: International payments to Indian business accounts carry a 4.4% transaction fee, plus a 3% to 4% markup when currencies are converted.
- Skydo: An RBI-authorised cross-border payments platform for Indian freelancers, exporters and small businesses. It lets them receive payments from international clients into their Indian bank account.