In a major development, the Reserve Bank of India (RBI) announced on Thursday that the transaction limit for tax payments via UPI has been raised from Rs 1 lakh to Rs 5 lakh per transaction. RBI Governor Shaktikanta Das disclosed this update while presenting the third bi-monthly monetary policy for the current financial year.
According to NPCI, “For normal UPI the transaction limit is up to Rs 1 Lakh per transaction. For few specific categories of transaction in UPI like Capital Markets, Collections, Insurance, 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.”
In December 2021, The transaction limit for UPI payments for Retail Direct Scheme and IPO subscriptions was increased to Rs 5 lakh.
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Ease of Tax Payments with Increased UPI Limit
Individuals often need to make various tax payments throughout the year, such as income tax, property tax, and advance tax. The new increase in the UPI limit to Rs 5 lakh per transaction will simplify these payments.
With UPI, you need a UPI-supported app, an active bank account, and a linked mobile number. Once your UPI ID is set up, you can make payments easily by entering a 4 or 6-digit PIN.
In contrast, using debit or credit cards for tax payments requires entering card details, CVV, and expiry date each time. Sometimes, you also need to provide a one-time password (OTP) to complete the payment.
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Other announcements
Along with the hike in the UPI limit for tax payments to Rs 5 lakh, the RBI has also announced introduction of delegated payments via UPI. As per the announcement made, the delegated UPI payments would allow an individual to set a UPI transaction limit for another individual on the primary user’s bank account.
This is likely to mean that an individual will be able to provide access to his bank account for UPI payments to another individual say (family member). This product is expected to add to the reach and usage of digital payments across the country. Detailed instructions will be issued shortly.
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