UPI transaction limit increased to ₹5L lakh for these categories
What's the story
The National Payments Corporation of India (NPCI) has announced an increase in the transaction limit for certain Unified Payments Interface (UPI) payments, including tax payments.
The new limit is set at ₹5 lakh, a significant rise from the previous cap of ₹1 lakh.
This change is expected to be implemented from today.
Compliance requirement
NPCI's directive to banks and payment service providers
In a circular dated August 24, 2024, NPCI stated that the transaction limit should be increased for the MCC 9311 category of verified merchants.
The corporation has directed all member banks, payment service providers, and UPI apps to ensure compliance with this revised limit by September 15.
The move is aimed at facilitating tax payments via UPI for millions of taxpayers in India.
Industry perspective
Expert views on the increased UPI transaction limit
Rahul Jain, CFO of NTT DATA Payment Services India, has lauded NPCI's decision as a significant step toward a digitally inclusive economy.
He believes that this initiative will enhance the tax collection system and make tax payments more convenient for taxpayers.
Mandar Agashe, Founder and MD of Sarvatra Technologies, also supports the move, stating that it will encourage users to continue using UPI for high-value payments.
Expanded scope
Other categories eligible for increased UPI transaction limit
The increased UPI transaction limit of ₹5 lakh per transaction also applies to payments made to hospitals and educational institutions, as well as IPOs and RBI retail direct schemes.
However, this revised limit is only applicable for certain transactions and the merchant must be verified.
The final decision on whether these transactions are permitted lies with individual banks and UPI apps.
Bank discretion
Standard UPI transaction limit and bank-specific variations
The standard UPI transaction limit for peer-to-peer transactions is ₹1 lakh. However, individual banks have the discretion to set their own limits.
For example, Allahabad Bank has a limit of ₹25,000 while HDFC Bank and ICICI Bank permit transactions up to ₹1 lakh.
Different types of UPI transactions such as those related to capital markets, collections, insurance, and foreign inward remittances have a daily limit of ₹2 lakh.