Soon, individuals can use the Unified Payments Interface (UPI) to pay taxes up to Rs 5 lakh. The National Payments Corporation of India (NPCI) has increased the transaction limit for tax payments using UPI to help millions of taxpayers in the country.
Soon, you can use UPI for tax payments of up to Rs 5 lakh
In a circular dated August 24, 2024, NPCI said, “With UPI emerging as a preferred payment method, there is a need to enhance the per transaction limit in UPI for specific categories… In view of the above the per transaction value limit in UPI has now been enhanced to Rs 5 lakh for entities under categories aligned to tax payments.”
NPCI asked banks, payment service providers and UPI apps to ensure that the transaction limit should be increased for the MCC 9311 category of verified merchants. “Acquiring entities must ensure that the classification of their merchants within MCC 9311 strictly adheres to the tax payments only. They shall ensure that entities added to the ‘verified merchant’ list after proper due diligence,” NPCI stated. The merchants shall also ensure that UPI as a payment mode is enabled for the increased limit for the tax payments category, NPCI mentioned.
NPCI has asked all the members — banks, payment service providers and UPI apps to ensure compliance with the increase in tax payment transaction limit by September 15, 2024.
Commenting on the latest development, Rahul Jain – CFO, of NTT DATA Payment Services India says, “NPCI 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 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.”
This, effectively, means that an individual can use UPI to make tax payments of up to Rs 5 lakh in a single transaction, starting September 16, 2024. With this, individuals can now make UPI payments of up to Rs 5 lakh per transaction for the following categories: a) tax payments, b) hospital and educational institutions, and c) IPOs and RBI retail direct schemes. The merchant should be verified to make these transactions. Do keep in mind that the increased limit will apply only to certain transactions. Further, you have to check with your bank and the UPI app whether they are allowing it or not.
UPI transaction limits for various payments
The standard UPI transaction limit is Rs 1 lakh for peer-to-peer transactions. However, banks can decide their own UPI transaction limits. For instance, the UPI transaction limit in Allahabad Bank is Rs 25,000, according to Google Pay UPI issuing bank-wise limits. Whereas HDFC Bank, ICICI Bank have allowed UPI transactions of up to Rs 1 lakh for peer-to-peer payments. On top of this, different UPI apps have varying transaction limits as well.There are other transaction limits for different types of UPI transactions. UPI transactions related to capital markets, collections, insurance, and foreign inward remittances have a limit of Rs 2 Lakh per day.
Banks can also decide individual daily UPI transaction limits. So at the end of the day, how much money you can transact through the UPI app will depend on your bank and the UPI app that you are using.