The Monetary Policy Committee (MPC) stated that the transaction limit has been hiked to Rs 5 lakh from the previous Rs 1 lakh

The UPI limit for tax payments has increased from Rs 1 lakh to Rs 5 lakh by the Reserve Bank of India (RBI). This will help the taxpayers to pay the high amount of tax in a single UPI payment. The tax liability may incur additional charges when it is paid through debit and credit cards. However, the Unified Payment Interface (UPI) does not attract any additional costs after making a tax payment.

The Monetary Policy Committee (MPC) stated that the transaction limit has been hiked to Rs 5 lakh from the previous Rs 1 lakh easing the tax payments by consumers via UPI payments. In December 2023, the central bank increased hospital and educational institutions UPI payments to 5 lakh.

The UPI has been considered the most viable and preferred payment method and the RBI has reviewed and found the need to increase the limit on certain categories like IPO subscriptions, capital markets, loan collections, insurance and academic services, as per RBI’s statement on Development and Regulatory policies. It was said that the decision is taken as the indirect tax payments are common, it is necessary to hike the limit of the tax payments via UPI and the other instructions on the matter will be issued separately.

Apart from the UPI limit hike, RBI introduced access to delegate payments that would allow a person to set a UPI limit for another from the primary account that the delegate payment may give access to the person’s bank account to another individual, a family member or friend, for UPI payments. The RBI intends to expand the use of UPI promoting digital payments in every nook and corner of the country. The detailed guidelines will be issued later.