If you use the Unified Payments Interface (UPI) for transactions, there’s significant news for you. The government has announced a major change that will allow taxpayers to make tax payments up to ₹5 lakh via UPI, a substantial increase from the previous much lower limit. This move is expected to provide considerable relief to millions of taxpayers across the country.

NPCI Increases UPI Transaction Limit

The National Payments Corporation of India (NPCI) has raised the transaction limit for UPI payments to ₹5 lakh specifically for tax payments. In a circular dated August 24, 2024, NPCI stated that UPI is emerging as a preferred payment method, necessitating an increase in transaction limits for certain categories. The limit for each UPI transaction has been increased to facilitate larger payments without hassles.

Instructions to Banks and Payment Providers

NPCI has directed banks, payment service providers, and UPI apps to:

Ensure Implementation: Increase the transaction limit for verified merchants categorized under MCC 9311, which pertains to tax payments.
Enable UPI for Higher Limits: Taxpayers should confirm that their UPI apps and bank accounts are enabled to handle the increased limit for tax payments.

Implementation Deadline

Banks, payment service providers, and UPI apps have been asked to implement the new limit by September 15. This means that from September 16 onwards, taxpayers can use UPI to make tax payments up to ₹5 lakh. Additionally, individuals can now make UPI payments up to ₹5 lakh per transaction for other specific categories as well.

Other Services with Increased UPI Limit

The increased UPI transaction limit of ₹5 lakh is also applicable for payments to:

Hospitals and Educational Institutions
Initial Public Offerings (IPOs)
RBI Retail Direct Schemes

Note: This higher limit applies only to certain transactions. Users should check with their respective banks and UPI apps to confirm the permitted limits.

Current UPI Transaction Limits

Peer-to-Peer Transfers: Generally limited to ₹1 lakh per transaction. However, banks may set their own limits.
- Allahabad Bank: Up to ₹25,000 per UPI transaction.
- HDFC Bank and ICICI Bank: Limit set at ₹1 lakh per transaction.
Capital Markets, Collections, Insurance, and Foreign Inward Remittances: UPI limit is ₹2 lakh per transaction.