The National Payments Corporation of India (NPCI) has announced a significant change that will benefit millions of taxpayers. Starting September 16, 2024, individuals can use the Unified Payments Interface (UPI) to pay taxes up to Rs 500,000 per transaction. This update aligns with NPCI’s guidelines, which aim to increase UPI transaction limits for various purposes, including tax payments.
New UPI Transaction Limits
In a circular dated August 24, 2024, NPCI stated that the transaction limit for tax payments will be raised to Rs 500,000 per transaction. This move is designed to streamline the tax payment process and promote the use of UPI for higher-value transactions.
Aside from taxes, the new UPI limits will also apply to payments for services like hospital bills, educational institutions, Initial Public Offerings (IPOs), and the Reserve Bank of India’s (RBI) direct retail program. Banks and UPI apps are required to ensure their systems are compatible with these new limits.
Limitations and Compatibility
It’s important to note that this increased limit is applicable only for specific transactions. Users should verify with their banks and UPI apps to confirm support for these higher transaction values.
A report by Economic Times highlighted that banks, payment service providers, and UPI applications are required to adjust their systems according to the new limit. Specifically, merchants in the MCC Category 9311, which covers tax-eligible transactions, must comply strictly with NPCI’s updated guidelines.
Industry Response
Commenting on this development, NTT Data Payments stated, “NPCI’s decision to raise the UPI transaction limit for tax payments to Rs 500,000 from the previous Rs 100,000 is a major step towards building a more inclusive digital economy in India.” Rahul Jain, Chief Financial Officer of Indian Services, added, “This system will strengthen the tax collection process, reduce costs, and offer more convenience to taxpayers.”
UPI Transaction Limits Across Banks
While the default UPI transaction limit for peer-to-peer transfers remains Rs 100,000, individual banks may set their own limits. For instance, Allahabad Bank caps UPI transactions at Rs 25,000, while both HDFC Bank and ICICI Bank allow up to Rs 100,000.
For other UPI-based transactions related to capital markets, insurance, or foreign remittances, a Rs 200,000 daily limit is in place. Ultimately, the amount a person can transact via UPI depends on the limits set by their bank and the UPI app they use.
