RBI Raises UPI Tax Payment Limit to ₹5 Lakh

In a significant move aimed at simplifying tax payments, the Reserve Bank of India (RBI) has announced an increase in the Unified Payments Interface (UPI) limit for tax-related transactions. Effective immediately, the new cap will be raised from ₹1 lakh to ₹5 lakh per transaction.

**Enhanced Convenience for Taxpayers**

The announcement was made during the RBI's third bi-monthly monetary policy review for the current financial year. RBI Governor Shaktikanta Das highlighted that the adjustment will facilitate smoother and quicker tax payments for individuals and businesses with larger tax liabilities. Previously, UPI transactions were limited to ₹1 lakh, except for specific categories of payments that had higher limits.

“This increase in the UPI limit for tax payments will ease the process for taxpayers and reduce the hassle associated with higher-value transactions,” said Governor Das. He emphasized that UPI payments generally do not incur additional charges, unlike transactions made through debit and credit cards.

**Historical Context and Future Outlook**

This adjustment marks the second time the RBI has raised the UPI transaction limit in recent times. In December 2023, the central bank had previously expanded limits for certain categories, including payments for hospital and educational services. The decision to increase the limit for tax payments follows a trend of periodically reviewing and enhancing UPI limits to accommodate various use cases such as capital markets, IPO subscriptions, and loan collections.

The RBI's ongoing commitment to optimizing digital payment methods underscores the growing preference for UPI due to its seamless and user-friendly features. The central bank will issue further instructions on implementing this revised limit in due course.

This latest change is expected to significantly streamline the process for taxpayers, making it more efficient to handle substantial tax payments directly through UPI.