After RBI started tightening rope over PayPal to get clear details on how payments and foreign money was getting in and out of India, Soumen found another ban or restrictions particularly restricted for Indian Accounts. In one line if you plan to make payments from one Indian PayPal Account to another Indian PayPal account via credit card, the system does not allow you to do that.
This error message was shown when Soumen tried paying to one of his Indian Authors. Remember he wasnt transferring funds available in PayPal but using his card to make payment to one of the invoice generated by his Author.
Not sure when this restriction came into action but seems like one of the steps that asks you to get your local payments done via check or bank accounts which is definitely a good move as government will get to know how funds are flowing in and out.
Last time when PayPal issue came in one of the most interesting thing was that Indian Users will have to transfer money to their bank account within a week but looking on Twitter and Facebook, it seems the restriction is not automated yet.
My questions here is that the same condition is applicable for other countries or is this happening because PayPal is being restricted more in India.