RBI Increases UPI Limit for Tax Payments, Introduces Delegate Payments Feature
The Reserve Bank of India (RBI) has announced an increase in the limit of Unified Payments Interface (UPI) transactions for tax payments, a move aimed at promoting digital payments for tax settlements. The new limit allows individuals to transact up to Rs. 5,00,000 while settling their tax liabilities, a significant increase from the earlier limit of Rs. 1,00,000.
The decision was made as part of the RBI’s Monetary Policy announcement last week. In a post on its official Twitter handle, the RBI stated, “UPI has become the most-preferred mode of payments, due to its seamless features. As direct and indirect tax payments are common, regular and high value, it has been decided to enhance the limit for tax payments through UPI from 1 lakh to 5 lakh per transaction.”
The central bank’s goal is to popularize digital payments for tax settlements, making it easier for individuals with higher tax liabilities to make payments directly via UPI. One of the significant advantages of UPI over traditional methods like credit or debit cards is that UPI transactions do not incur an additional processing fee.
Notably, UPI transactions for most use cases have a limit of Rs. 1,00,000 per transaction. However, a few categories, including Capital Markets, Collections, Insurance, and Foreign Inward Remittances, have a higher limit of Rs. 2,00,000. Additionally, Initial Public Offering (IPO) transactions are allowed up to Rs. 5,00,000. Tax payments have joined the latter category.
RBI Governor Shaktikanta Das said in a press conference that the decision to increase the UPI payment limit was taken in the Monetary Policy Committee (MPC) as direct and indirect tax payments are generally routine, regular, and contain a high value. Detailed instructions regarding this change will be issued separately.
Apart from the UPI limit hike for tax payments, the MPC introduced a new feature dubbed Delegate Payments. This feature allows an individual classified as primary user to set a UPI transaction limit for a secondary user on their bank account. Put simply, this feature will allow an individual to let a family member use their bank account via UPI to make transactions up to a specific limit, which could be beneficial in cases where every individual in the family does not own a bank account.
The announcement is expected to boost the adoption of UPI for tax payments, making it more convenient and efficient for individuals to settle their tax liabilities.
