Soon, you will be able to use UPI for tax payments up to Rs 5 lakh
In a circular dated August 24, 2024, NPCI said, “As UPI is emerging as a preferred payment method, there is a need to enhance the per transaction limit on UPI for specific categories… In view of the above, the per transaction value limit on UPI has now been enhanced to Rs 5 lakh for entities under categories aligned with tax payments.”
NPCI has asked banks, payment service providers and UPI apps to ensure that the transaction limit is increased for the MCC 9311 category of verified merchants. “Acquiring entities should ensure that the classification of their merchants under MCC 9311 is strictly adhered to for tax payments only. They shall ensure that the entities are added to the list of ‘verified merchants’ after due diligence,” the NPCI said. Merchants should also ensure that UPI as a payment mode is enabled for the increased limit for the tax payments category, the NPCI said.
NPCI has asked all members (banks, payment service providers and UPI apps) to ensure compliance with the increase in tax payment transaction limit by September 15, 2024.
Commenting on the latest development, Rahul Jain, Chief Financial Officer, NTT DATA Payment Services India, said, “NPCI’s announcement to increase the transaction limit to Rs 5 lakh for tax payments using UPI, from Rs 1 lakh earlier, is a significant step, propelling India towards a digitally inclusive economy. This initiative will strengthen the tax collection system, reduce the cost of tax collection and make tax payments more convenient for taxpayers. This also means more benefits for taxpayers in terms of seamless, transparent, secure and easy-to-perform high-value transactions.”
This, effectively, means that a person can use UPI to make tax payments of up to Rs 5 lakh in a single transaction, starting from September 16, 2024. With this, people can now make UPI Payments of up to Rs 500,000 per transaction for the following categories: a) Tax payments, b) Hospital and educational institutions, and c) IPO and RBI direct retail schemes. The merchant must be verified to carry out these transactions. Please note that the increased limit will apply only to certain transactions. Also, you must check with your bank and UPI app whether they allow it or not.
UPI transaction limit for various payments
The standard UPI transaction limit is Rs 1 lakh for peer-to-peer transactions. However, banks can decide their own UPI transaction limits. For example, the UPI transaction limit at Allahabad Bank is Rs 25,000, as per Google Pay UPI issuing bank limits. HDFC Bank, ICICI Bank UPI transactions up to Rs 1 lakh have been allowed for peer-to-peer payments. Apart from this, different UPI apps also have different transaction limits. There are other transaction limits for different types of UPI transactions. UPI transactions related to capital markets, collections, insurance, and incoming foreign remittances are limited to Rs 2 lakh per day.
Banks can also decide individual limits for daily UPI transactions. So, at the end of the day, the amount of money you can make using the UPI app will depend on your bank and the UPI app you are using.
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