NPCI Enhances UPI for High-Value Transactions, Raising Tax Payment Limit
Indian taxpayers are set to enjoy enhanced convenience with the recent upgrade to the Unified Payments Interface (UPI) system. The National Payments Corporation of India (NPCI) has raised the UPI transaction limit for tax payments, allowing up to ₹5 lakh per transaction, a notable increase from the previous ₹1 lakh cap.
This update, issued through an NPCI circular on August 24, 2024, addresses the growing reliance on UPI and the need to accommodate larger transactions across certain sectors.
Key Changes:
- Increased Limit for Tax Payments: UPI can now process tax payments of up to ₹5 lakh per transaction, significantly expanding the previous threshold.
- Broader Application: The increased transaction limit will also be applicable for payments related to hospitals, educational fees, IPO subscriptions, and RBI’s retail direct schemes.
- Merchant Authentication: Merchants must be verified to handle these higher-value transactions through UPI.
- Effective Date: The new limit will take effect starting September 16, 2024. However, users should verify with their banks or UPI apps if they support the enhanced limit, as individual banks may impose different restrictions.
For example, while Allahabad Bank limits UPI transactions to ₹25,000, HDFC Bank and ICICI Bank allow up to ₹1 lakh for peer-to-peer transactions.
NPCI has directed all banks and payment service providers to align with the new guidelines by September 15, 2024. This change aims to simplify tax payments and encourage UPI for larger transactions.
To ensure the availability of this new feature, users are advised to confirm compatibility with their bank or UPI platform. The increase in UPI limits is part of NPCI’s broader push to make digital payments in India more efficient and accessible for high-value transactions.
