UPI Transaction Limit to Change from Tomorrow: NPCI Announces New Rules Benefiting Taxpayers

In a recent circular, NPCI announced that businesses classified under the Merchant Category Code (MCC) 9311, responsible for paying taxes, must adhere to this new transaction limit. NPCI has instructed all procurement organizations to ensure that their merchants comply with this update, allowing UPI payments for tax amounts up to Rs 5 lakh.

Alignment with RBI Policy

This decision aligns with the Reserve Bank of India’s (RBI) monetary policy statement from August 8, 2024, which raised the UPI transaction limit for tax payments. This increase aims to make large transactions more convenient for taxpayers.

New UPI Limits Across Various Sectors

The expanded UPI limit will not be confined to tax payments alone. It will also apply to transactions in sectors like healthcare, education, Initial Public Offerings (IPOs), and government bonds, providing citizens with greater convenience in financial dealings across these services.

Introduction of UPI Circle Feature

Another key update by NPCI is the introduction of a new feature called “UPI Circle.” This feature allows primary UPI account holders to delegate transactions to trusted individuals, enhancing both security and ease of use.

Previous Changes to UPI Limits

NPCI had previously revised UPI transaction limits in December 2021 and December 2023, reflecting its ongoing efforts to expand the use of UPI in various sectors, including tax payments.

Industry Response to the Changes

Rahul Jain, CFO of NTT DATA Payment Services India, praised the decision, stating, “Extending the UPI limit to Rs 5 lakh for tax payments is a critical step toward Digital India. This move will streamline the tax collection process, reduce associated costs, and offer a more user-friendly payment method for taxpayers.”

UPI Transaction Limits in Other Areas

For general person-to-person transactions, the UPI limit remains at Rs 1 lakh, though individual banks may impose their own restrictions. For instance, Allahabad Bank caps UPI transactions at Rs 25,000, while both HDFC and ICICI Bank allow transactions up to Rs 1 lakh. Specific limits also apply to areas such as stock market transactions, insurance payments, and foreign remittances, with a daily cap of Rs 2 lakh.