I agree with you @Domainant since 18% is quite an exorbitant amount. I'm trying to open the link with little success but I guess I will get more insight after reading. Still, won't this discourage freelancers from using PayPal? What other payment methods are available?
Paypal can not do anything in this case, this step is taken by Govt. Of India and tax on cross border transactions was introduced while the era of Service tax Only. I think around in December 2016. This is applicable to all the operator around the globe to collect the tax from Indian Consumer. No Choice!