RBI increases UPI limit for tax payments to INR 5 lakh

Increasing the tax payment limit through UPI from INR 1 lakh to INR 5 lakh per transaction will facilitate payments made by consumers through UPI, RBI Governor said

The central bank also announced the introduction of delegated payments via UPI

Delegated Payment will enable the primary user to allow the secondary user to make UPI transactions up to the limit set by the primary user from the linked bank account

The Reserve Bank of India (RBI) on Thursday (August 8) announced an increase in the transaction limit through Unified Payments Interface (UPI) from the current limit of INR 1 lakh to INR 5 lakh per transaction for tax settlement purposes.

“Currently, the transaction limit for UPI is INR 1 lakh, except for certain categories of payments which have higher transaction limits. It has been decided to increase the limit for tax payments through UPI from INR 1 lakh to INR 5 lakh per transaction. This will further facilitate payments by consumers through UPI,” RBI Governor Shaktikanta Das said during the bi-monthly meeting of the Monetary Policy Committee.

The central bank also announced the introduction of delegated payments via UPI.

“It is proposed to introduce delegated payments facility in UPI. This should enable a person (who) is a primary user to enable another person, namely a secondary user, to make UPI transactions up to the limit set by the primary user from the primary user’s bank account without the need for the secondary user to have a separate UPI-linked bank account,” Das said.

RBI expects this to further increase the reach and usage of digital payments, especially UPI, which has seen significant growth over the last few years.

In July, UPI saw 49% year-on-year growth (YoY) to 14.44 billion transactions in the month. In June, the figure was INR 13.89 billion.

Earlier this year, the RBI Governor noted that India now accounts for nearly 46% of global digital transactions, attributing the growth to the widespread adoption of UPI.

UPI has also expanded its wings internationally through partnerships in countries including the United Arab Emirates, France and Sri Lanka. In its latest efforts to boost the use of UPI, the National Payments Corporation of India (NPCI) has also introduced ‘UPI One World“a wallet for all foreign tourists.

According to the report, NPCI is in talks with several startups to enable biometric authentication in the case of popular UPI mobile payments, which would likely mean the need to use fingerprint on Android platforms and face verification on iPhones.

Apart from the two announcements on UPI transactions, the RBI Governor today also said that Central bank creates public repository for digital lending applications to resolve issues arising from unauthorized platforms.

Meanwhile, the RBI kept the repo rate unchanged at 6.5% during the MPC meeting today. Core inflation in the country rose to 5.1% in June 2024 after remaining at 4.8% in April-May 2024.