The Reserve Bank of India (RBI) has proposed an increase in the UPI tax payment ceiling from Rs. 1 lakh to Rs. 5 lakh, enabling taxpayers to pay their increased tax obligations quickly. Payments made over UPI often do not incur any extra fees, unlike when using debit or credit cards. The RBI has previously raised the cap on certain payments, such as those to hospitals and educational institutions, to Rs. 5 lakh in December 2023.
The transaction limit for regular UPI is up to Rs 1 Lakh per transaction. The maximum transaction limit via UPI is Rs 2 lakh for a few certain kinds of transactions, such as capital markets, collections, insurance, and foreign inward remittances. The maximum transaction limit under Retail Direct Scheme and Initial Public Offering (IPO) is Rs 5 lakh per transaction.
The RBI Governor stated that the current transaction limit for UPI is Rs 1 lakh, with the exception of several payment categories that have greater transaction limitations. The decision has been made to increase the maximum amount that may be paid in taxes via UPI from Rs 1 lakh to Rs 5 lakh per transaction. Customers will find it easier to pay taxes using UPI as a result.
The new cap will assist people with their tax payments by making it easier to pay direct and indirect taxes. To conduct a UPI transaction, a person must have an active bank account, an active mobile phone connected to that bank account, and applications that enable UPI. Payments using the app may be made by entering a 4- or 6-digit PIN once the UPI ID has been set up.
The RBI has also announced the launch of delegated payments via UPI in addition to raising the UPI ceiling for tax payments to Rs 5 lakh. One person will be able to set a UPI transaction limit for another person using delegated UPI payments. This product is anticipated to increase digital payment adoption and reach nationwide. In-depth guidelines will be released soon.
