Starting September 16, taxpayers in India will benefit from a change in the Unified Payments Interface (UPI) system. The National Payments Corporation of India (NPCI) has announced an increase in the UPI transaction limit for tax payments, raising it from ₹1 lakh to ₹5 lakh per transaction.

This update follows an NPCI circular dated August 24, 2024.

The circular highlighted the growing preference for UPI as a payment method and the need to accommodate higher-value transactions in specific categories.

Key changes

Transaction limit increase: UPI will now support tax payments up to ₹5 lakh per transaction.

Other eligible transactions: This higher limit will also apply to payments for hospitals, educational institutions, IPOs, and RBI retail direct schemes.

Merchant verification: To use this enhanced limit, the merchant must be verified.

Implementation: The new limit will be effective from September 16, 2024. However, users should confirm with their banks and UPI apps whether they support this increased limit, as individual banks may have specific transaction limits.

For instance, Allahabad Bank’s UPI limit is currently set at ₹25,000, while HDFC Bank and ICICI Bank offer up to ₹1 lakh for peer-to-peer transactions.

NPCI had instructed all banks and payment service providers, to ensure compliance by September 15, 2024.

This move aims to streamline the tax payment process and encourage the use of UPI for larger transactions.

For those looking to make use of the new limit, checking with bank and UPI app for compatibility is recommended.

The increase in transaction limits is part of NPCI’s effort to enhance the convenience and efficiency of digital payments in India.