In a major update aimed at enhancing the convenience of tax payments, the National Payments Corporation of India (NPCI) has announced an increase in the Unified Payments Interface (UPI) transaction limit for tax-related payments. Effective September 16, 2024, individuals will be able to use UPI to pay taxes up to Rs 5 lakh in a single transaction.
The new transaction limit, up from the previous cap of Rs 1 lakh, is intended to facilitate larger, high-value transactions seamlessly through UPI, a payment method that has become increasingly popular for its convenience and efficiency. This move aligns with the NPCI’s goal to support a digitally inclusive economy and streamline tax collection processes.
According to an NPCI circular dated August 24, 2024, the enhanced limit will apply specifically to transactions in the MCC 9311 category, which pertains to tax payments. The circular instructs banks, payment service providers, and UPI apps to ensure compliance by the deadline of September 15, 2024. These entities must ensure that their merchant classifications adhere strictly to tax payments and are verified accordingly.
Rahul Jain, CFO of NTT DATA Payment Services India, praised the NPCI’s decision, noting that the increase to Rs 5 lakh will bolster the tax collection system, reduce operational costs, and offer greater convenience and security for taxpayers. Jain highlighted that this change will also benefit users by providing a more transparent and efficient means for handling substantial transactions.
In addition to tax payments, the enhanced UPI limit will be applicable to payments for hospitals, educational institutions, IPOs, and RBI retail direct schemes, provided the merchants are verified. It is important for users to check with their respective banks and UPI apps to confirm whether the increased limit is supported.
While the standard UPI transaction limit for peer-to-peer payments remains Rs 1 lakh, banks have the flexibility to set their own limits for various transaction types. For instance, some banks like Allahabad Bank have a lower UPI limit, while others, including HDFC Bank and ICICI Bank, support transactions up to Rs 1 lakh. Additionally, UPI transactions related to capital markets, insurance, and foreign remittances have a daily limit of Rs 2 lakh.
As the financial landscape continues to evolve, this significant update by NPCI underscores a commitment to modernizing payment systems and making high-value transactions more accessible for all.
ALSO READ | India’s Forex Reserves Surge To $689 Billion, Boosting Economic Stability | NewsX
