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National Payments Corporation of India (NPCI) has increased the transaction limit for tax payment using Unified Payments Interface (UPI). This will benefit millions of taxpayers in the country. Now taxpayers can use UPI to pay tax up to Rs 5 lakh. The new change aims to simplify and promote large transactions using UPI.

According to the NPCI circular dated August 24, with UPI emerging as a preferred payment method, there is a need to increase the per transaction limit in UPI for specific categories… Considering all these things, the per transaction value limit has been increased in UPI. Now it has been increased to Rs 5 lakh for entities under tax payment related categories. On August 8, 2024, RBI announced to increase the limit of tax payment through UPI from Rs 1 lakh to Rs 5 lakh per transaction.

From Monday (September 16), the updated UPI limits will also apply to other transactions including hospital expenses, educational institutions, IPOs and RBI Retail Direct schemes. However, these transactions must be done through verified merchants, and users must also check if their banks and UPI apps support the increased limits.

In addition, NPCI has directed banks, payment service providers and UPI apps to ensure that the new transaction limit is applicable by September 15, 2024. They will also have to follow the strict merchant categorization rules of MCC 9311. These companies will have to accept UPI as a payment mechanism for higher limits, especially for tax payments.

UPI transaction limits for various payments

The standard UPI transaction limit for peer-to-peer transactions is Rs 1 lakh. However, banks can set their own UPI transaction limits. For example, according to Google Pay UPI, which issues bank-wise limits, Allahabad Bank has a UPI transaction limit of Rs 25,000. While HDFC Bank, ICICI Bank have allowed UPI transactions of up to Rs 1 lakh for peer-to-peer payments. Apart from this, different UPI apps also have different transaction limits.

There are other transaction limits for different types of UPI transactions. UPI transactions related to capital markets, collections have a limit of Rs 2 lakh per day. Banks may also set individual daily UPI transaction limits. So at the end of the day, how much money you can transact through a UPI app will depend on your bank and the UPI app you are using.