RBI Raises UPI Limit to Rs. 5 Lakh for Tax Payments, Introduces Delegated Payments Feature

The Reserve Bank of India RBI lately introduced a rise in restrict of Unified Payments Interface (UPI) transactions for tax funds. The choice was made as part of RBI’s Monetary Policy announcement final week. With this, customers can now transact as much as Rs. 5,00,000 whereas settling their tax liabilities. Earlier, this restrict was saved at Rs. 1,00,000. Additionally, the central financial institution has additionally proposed the introduction of Delegrated Payments in UPI, which is able to permit a person to let a second particular person entry their financial institution accounts through UPI as much as a particular restrict.

RBI Hikes UPI Transactions for Tax Payments

In a post on X (previously generally known as Twitter), the official deal with of RBI introduced the brand new UPI change and mentioned, “UPI has change into the most-preferred mode of funds, as a consequence of its seamless options. As direct and oblique tax funds are frequent, common and excessive worth, it has been determined to boost the restrict for tax funds by way of UPI from 1 lakh to five lakh per transaction.”

The central financial institution goals to popularise digital funds for tax settlements by way of this coverage change. With a restrict of as much as Rs. 5,00,000 per transaction, even these with a better ceiling of tax liabilities will be capable to make funds immediately through UPI. One vital benefit of choosing UPI over conventional strategies comparable to credit score or debit playing cards is that these transactions incur a further processing payment, which doesn’t exist in UPI.

Notably, UPI transactions for many use instances is saved at Rs. 1,00,000 per transaction. However, a couple of classes permit a better restrict. Payments in Capital Markets, Collections, Insurance, and Foreign Inward Remittances have a transaction restrict of Rs. 2,00,000, whereas Initial Public Offering (IPO) transactions is allowed as much as Rs. 5,00,000. Tax funds have joined the latter class.

In a press conference, RBI Governor Shaktikanta Das mentioned that the choice to extend UPI cost restrict was taken within the Monetary Policy Committee (MPC) as direct and oblique tax funds are usually routine, common, and include a excessive worth. Detailed directions relating to this modification shall be issued individually.

Apart from the UPI restrict hike for tax funds, the MPC additionally launched a brand new function dubbed Delegate Payments. As per RBI, it permits a person categorized as main consumer to set a UPI transaction restrict for a secondary consumer on the first consumer’s checking account.

Put merely, this function will permit an individual to let a member of the family use their checking account through UPI to make transactions as much as a particular restrict. This might be helpful in instances the place each particular person within the household doesn’t personal a checking account.