Starting from September 16, 2024, taxpayers and other users in India will benefit from a significant change in the Unified Payments Interface (UPI) system. The National Payments Corporation of India (NPCI) has announced a major update to the UPI transaction limit, raising the cap from ₹1 lakh to ₹5 lakh per transaction. This increase will apply specifically to tax payments and a few other categories, making it easier for users to handle larger transactions through the convenience of UPI.
This update is part of NPCI’s ongoing effort to enhance the efficiency and usability of digital payments in India, allowing for smoother high-value transactions in specific areas like tax payments, hospital bills, educational fees, and more.
The news about this update stems from an NPCI circular dated August 24, 2024. The circular emphasizes the growing popularity of UPI as a preferred method for making digital payments. In response to this surge in usage, NPCI identified the need to allow for higher-value transactions in certain essential categories. This led to the decision to increase the transaction limit to ₹5 lakh for select payments.
The key goal of this increase is to make UPI a more versatile and efficient option for handling larger transactions, particularly in areas like tax payments, where the previous limit of ₹1 lakh could be a limitation.
The most notable change is the increase in the UPI transaction limit to ₹5 lakh for tax payments. This will make it significantly easier for taxpayers to handle large tax obligations directly through the UPI platform, eliminating the need for multiple transactions or alternative payment methods.
In addition to tax payments, the ₹5 lakh transaction limit will also apply to several other categories, including:
Payments for hospitals: Medical expenses can be significant, especially in emergency situations, and the new limit will allow patients and families to make large payments seamlessly.
Educational institutions: Many schools and colleges now accept digital payments for tuition fees, and this increased limit will make it easier for parents and students to manage hefty semester or yearly fees.
Initial Public Offerings (IPOs): The limit increase is a boon for investors, allowing for larger IPO investments through UPI.
RBI Retail Direct schemes: This initiative by the Reserve Bank of India allows retail investors to buy government securities, and the higher transaction limit will now facilitate easier participation in these schemes.
For users to benefit from this increased UPI limit, it's crucial that the merchant or service provider is verified. Only verified merchants will be eligible to accept payments up to ₹5 lakh, ensuring added security and reliability for high-value transactions.
The new UPI limit comes into effect from September 16, 2024. However, users are advised to confirm with their respective banks and UPI apps whether they support this enhanced limit, as each bank may have its own transaction limits based on internal policies.
For example, while some banks like Allahabad Bank currently have a UPI limit of ₹25,000, others such as HDFC Bank and ICICI Bank offer transaction limits of up to ₹1 lakh for peer-to-peer transfers. Banks will need to align their systems with the new NPCI guidelines, and the changes may vary slightly depending on the institution.
The NPCI has directed all banks and payment service providers to comply with the new rules by September 15, 2024, ensuring that users can benefit from the increased limits on the stipulated date.
This move is expected to streamline the tax payment process, making it more convenient for individuals and businesses alike. Larger tax payments can now be processed quickly and securely through UPI, reducing the need for other, less convenient payment methods such as bank transfers or checks.
Beyond tax payments, the expansion of the higher limit to other key sectors, including healthcare and education, highlights NPCI's commitment to making UPI a comprehensive tool for handling both everyday expenses and larger financial obligations.
The shift also encourages greater adoption of digital payments across sectors that may have traditionally relied on cash or other forms of payment. By enabling larger transactions, the update fosters a more robust and efficient digital economy in India.
For those looking to take advantage of the new ₹5 lakh UPI limit, it is recommended to check with your bank and UPI app to ensure compatibility. While the NPCI has set the guidelines, individual banks may have their own processes and timelines for integrating these updates.
Some banks and payment apps may take longer to adopt the new system, so it’s essential to verify whether the increased limit is available for your specific account before attempting large transactions.
The increase in transaction limits is part of NPCI's broader strategy to enhance the convenience and efficiency of digital payments in India. Over the past few years, UPI has grown exponentially in popularity, becoming one of the most widely used payment methods in the country. By accommodating higher-value transactions, NPCI is ensuring that UPI remains a go-to option for a wide range of financial activities, from small everyday purchases to significant payments like taxes and educational fees.
In the long term, this move is expected to boost UPI’s role in India’s digital economy, attracting even more users to adopt digital payments for both personal and business transactions.
Conclusion
With the increase in UPI transaction limits to ₹5 lakh, India’s digital payment landscape is set to become even more convenient for taxpayers, students, patients, and investors. Starting from September 16, 2024, this update will enable users to process larger transactions effortlessly, provided their bank or UPI app supports the change.
This development aligns with NPCI’s commitment to promoting digital payments and making UPI an indispensable tool for all types of financial transactions in India. As UPI continues to evolve, this increased limit represents just one of many future enhancements that will help drive the country’s digital payment revolution.