Rule change: Do you use UPI too? This major change will happen from next week, find out who will benefit

If you are also using Unified Payments Interface (UPI), then there will be a big change soon. Taxpayers will soon be able to pay taxes up to Rs 5 lakh through UPI, the government said in a notification. Earlier, the limit was very low. This change will come as a huge relief to millions of taxpayers.

The National Payments Corporation of India (NPCI) has increased the transaction limits for tax payment using UPI to help millions of taxpayers in the country. The circular was issued by NPCI on August 24, 2024. It is stated that UPI is becoming a preferred payment method, so it is necessary to increase the per transaction limit of UPI for specific categories. It further stated that for institutions, the tax limit per transaction on UPI has been increased to Rs 5 lakh.

NPCI issues instructions to banks
NPCI has asked banks, payment service providers and UPI apps to ensure increase in transaction limits for verified merchants in category MCC 9311. NPCI said taxpayers should also ensure that UPI is enabled as a mode of payment for increased limits for taxable categories.

How long will this restriction apply?
NPCI has asked banks, payment service providers and UPI apps to implement the enhanced tax payment limit by September 15. This means that you can pay taxes up to Rs 5 lakh using UPI till September 16. In addition, individuals can now also make UPI payments up to Rs 5 lakh per transaction in other categories.

You can also pay up to Rs. 5 lakh for these services
UPI can also pay up to Rs 5 lakh towards hospitals and educational institutions, IPOs and RBI Retail Direct schemes. But it’s worth noting that this is only applicable for a handful of transactions. Beyond that, you’ll have to check with your bank and UPI to know the limits they allow.

What services have any restrictions?
Most peer-to-peer transactions have a UPI limit of Rs 1 lakh. However, these banks decide their own UPI limits. For example, Allahabad Bank has set a maximum limit of Rs 25,000 for UPI payments. HDFC Bank and ICICI Bank have fixed the limit at Rs 1 lakh. For capital markets, collections, insurance and foreign transactions, the UPI limit can go up to Rs 2 lakh.