SUMMARY
- The Reserve Bank of India (RBI) has increased the UPI limit for tax payments from Rs 1 Lakh to Rs 5 Lakh.
- The hike in the UPI limit will help taxpayers to pay higher tax liabilities quickly.
- RBI is also planning to introduce Delegated Payments through UPI which will enable a secondary user to make payments using UPI by making use of the bank account of the primary user.
The Reserve Bank of India (RBI) has increased the UPI limit for tax payments from Rs 1 Lakh to Rs 5 Lakh. The hike in the limit will help the taxpayers to pay higher tax liability quickly. Any additional charges were not needed during paying through UPI.
This is not the very first time that the RBI has increased the limit. In December 2023, the central bank hiked the limit to Rs 5 Lakh from certain payments, such as hospital and educational institutions.
According to reports, “For normal UPI the transaction limit is up to Rs 1 Lakh per transaction. For a few specific categories of transaction in UPI like Capital Markets, Collections, Insurance, and Foreign Inward Remittances the transaction limit is up to 2 lakh and for Initial Public Offering (IPO) and Retail Direct Scheme the limit is up to Rs 5 lakh per transaction.”
Rahul Jain – CFO, of NTT DATA Payment Services India says, “The Central Bank’s announcement to increase the transaction limit to Rs 5 lakh for tax payments using Unified Payments Interface (UPI), from Rs 1 lakh earlier is a significant move, propelling India towards digitally inclusive economy. This initiative will strengthen the tax-collection system, reduce the cost of tax collection, and make tax payments more convenient for taxpayers. This also means more benefits to taxpayers in terms of seamless, transparent, secured, and ease of making high-value transactions.”
As per the RBI Governor statement, “Currently, the transaction limit for UPI is Rs 1 lakh except for certain categories of payments which have higher transaction limits. It has now been decided to enhance the limit for tax payments through UPI from Rs 1 lakh to Rs 5 lakh per transaction. This will further ease tax payments by consumers through UPI. ”
As per the Statement on Development and Regulatory policies, “UPI has become the most preferred mode of payments, due to its seamless features. Currently, the transaction limit for UPI is capped at Rs 1 lakh. Based on the various use cases, the Reserve Bank has periodically reviewed and enhanced the limits for a few categories like capital markets, IPO subscriptions, loan collections, insurance, medical and educational services, etc. As direct and indirect tax payments are common, regular, and high value, it has been decided to enhance the limit for tax payments through UPI from Rs 1 lakh to Rs 5 lakh per transaction. Necessary instructions will be issued separately. ”
The RBI is also planning to introduce Delegated Payments through UPI which will enable a secondary user to make payments using UPI by making use of the bank account of the primary user.
As per statements, “It is proposed to introduce ‘Delegated Payments’ in UPI. Delegated Payments would allow an individual (primary user) to set a UPI transaction limit for another individual (secondary user) on the primary user’s bank account. This product is expected to add to the reach and usage of digital payments across the country. Detailed instructions will be issued shortly.”
The volume of UPI transactions in India skyrocketed from 12.5 billion in 2019-20 to 131 billion in 2023-24. As per the reports digital payments in India have recorded a compounded annual growth rate (CAGR) of 50 percent in volume terms and 10 percent in value terms over the last seven years, involving 164 billion transactions worth Rs2,428 lakh crore in 2023-24. This impressive growth has been supported by the Payment Infrastructure Development Fund (PIDF), which has improved the country’s payment infrastructure.
