The new UPI limit will now extend to various transactions, including payments for hospitals and educational institutions. UPI transaction limit change: The National Payments Corporation of India (NPCI) recently announced an update that will positively impact millions of taxpayers. From September 16, 2024, individuals can use UPI to pay taxes up to Rs 5 lakh per transaction. This follows an NPCI directive increasing the UPI transaction limit specifically for tax-related payments.
In an August 24, 2024, circular, the NPCI declared the transaction limit for tax payments would be raised to Rs 5 lakh per transaction, aiming to simplify tax payments and promote UPI for larger-value transactions. This increased limit will also apply to payments for hospitals, educational fees, IPOs, and RBI retail direct schemes. Users should check with their banks and UPI apps to ensure compatibility with the new limits.
It’s essential to note that this enhanced limit is applicable only to specific transactions, so users should confirm with their bank and UPI provider if they support the feature.
As reported by ET, banks, payment service providers, and UPI apps have been instructed to modify their systems to support the new Rs 5 lakh limit for verified tax payment merchants in the MCC 9311 category. NPCI stressed that acquiring entities must ensure their merchants comply strictly with tax payment rules.
“NPCI’s announcement to increase the transaction limit to Rs 5 lakh for tax payments using UPI, from Rs 1 lakh earlier, is a significant move, propelling India towards a digitally inclusive economy,” said Rahul Jain, CFO of NTT DATA Payment Services India. He added that this initiative would enhance tax collection, reduce costs, and provide a more convenient payment option for taxpayers.
The standard UPI transaction limit for peer-to-peer payments remains Rs 1 lakh, although banks may set their own limits. For instance, Allahabad Bank allows up to Rs 25,000, while HDFC Bank and ICICI Bank permit Rs 1 lakh for peer-to-peer transfers. Various UPI apps also have differing limits.
Other UPI transactions, like those involving capital markets, collections, insurance, and foreign inward remittances, are capped at Rs 2 lakh daily. Ultimately, the transaction limits depend on the policies of both the bank and the UPI app being used.
