RBI hikes limit for tax payments via UPI from Rs 1 lac to Rs 5 lac

Mangalore Today News Network

New Delhi, August 8, 2024: The Reserve Bank of India (RBI) has proposed to increase 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. The payments made via UPI usually do not attract any additional charges. This is not the case when tax payments are made via debit and credit cards. This is not the first time that the RBI has hiked 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 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.

Rahul Jain – CFO, 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."

What RBI Governor said on hiking UPI limit

As per the RBI Governor statement, "Currently, the transaction limit for UPI is Rs 1 lakh except for certain category 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. "

How new limit will help individuals in tax payments

An individual is required to make income tax payments, property tax payments, advance tax payments and so on in a financial year. The tax amount can be of higher value depending on the income of an individual. The hike in the UPI limit to make direct and indirect tax payments will make it easier. This is because to make the transaction via UPI an individual must have UPI supported apps, active bank account and active mobile number linked to that bank account. Once the UPI ID is set-up, the  payments will make it easier. This is because to make the transaction via UPI an individual must have UPI supported apps, active bank account and active mobile number linked to that bank account. Once the UPI ID is set-up, the payments via app can be made by entering 4 or 6 digit PIN.

However, in case of debit cards or credit cards, an individual is required to enter the card details, CVV, expiry date every time to make the payments. In certain cases, even one-time password (OTP) is req ..

Other UPI 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.