The Reserve Bank of India (RBI) has proposed to raise the UPI payment limit for tax purposes from Rs 1 lakh to Rs 5 lakh. This increase will enable taxpayers to promptly settle higher tax obligations. UPI payments typically do not incur any additional fees, unlike tax payments made through debit or credit cards. This is not the first time the RBI has raised the limit. In December 2023, the central bank increased the limit to Rs 5 lakh for certain payments, such as those made to hospitals and educational institutions. According to the National Payments Corporation of India (NPCI), the standard UPI transaction limit is up to Rs 1 lakh, but for specific categories like Capital Markets, Collections, Insurance, and Foreign Inward Remittances, the limit is up to Rs 2 lakh. For Initial Public Offerings (IPOs) and the Retail Direct Scheme, the limit has been set at Rs 5 lakh per transaction. In December 2021, the UPI payment limit for Retail Direct Scheme and IPO subscriptions was increased to Rs 5 lakh.

The recent increase in the transaction limit for tax payments using Unified Payments Interface (UPI) from Rs 1 lakh to Rs 5 lakh is a significant step that will drive India towards a more digitally inclusive economy. This initiative aims to strengthen the tax collection system, reduce the associated costs, and make tax payments more convenient for taxpayers. Consumers can now enjoy the benefits of seamless, transparent, and secure high-value transactions through UPI. According to the RBI Governor, the transaction limit for UPI was previously capped at Rs 1 lakh, except for certain payment categories with higher limits. The decision to raise the limit for tax payments to Rs 5 lakh per transaction will further facilitate and encourage the use of UPI for this purpose. UPI has become the preferred mode of payment due to its user-friendly features, and the Reserve Bank has periodically reviewed and enhanced the limits for various use cases, including capital markets, IPO subscriptions, loan collections, insurance, medical, and educational services.

Recognizing the prevalence of frequent, substantial tax payments, the authorities have resolved to raise the cap for tax remittances via the Unified Payments Interface (UPI) system. The new limit will be increased from the previous amount of Rs 1 lakh to a more accommodating Rs 5 lakh per transaction. Further details and instructions will be communicated through separate channels. Taxpayers now have a more convenient way to handle their financial obligations. With the increased UPI limit for tax payments, individuals can easily manage income tax, property tax, and other dues. The UPI system's accessibility, through mobile apps and linked bank accounts, simplifies the process. Transactions can be completed quickly by entering a 4 or 6-digit PIN, unlike the more cumbersome methods of inputting card details, CVV, and expiry dates, or waiting for one-time passwords. Additionally, the RBI's introduction of delegated UPI payments allows users to set transaction limits for others on their primary accounts, further streamlining tax-related transfers. These enhancements aim to make financial obligations more manageable and efficient for taxpayers.

Allowing someone, such as a family member, to access and make payments through your bank account using the Unified Payments Interface (UPI) system is the focus of this new offering. It aims to expand the adoption and usage of digital payment methods nationwide. Further details and guidance will be provided in the near future.

(Video Source: Mint)