In a move aimed at boosting digital payments and facilitating larger transactions, the Reserve Bank of India (RBI) on Thursday increased the upper limit for tax payments through the Unified Payments Interface (UPI) to Rs 5 lakh per transaction from the current Rs 1 lakh limit.
Previously capped at Rs 1 lakh, the enhanced limit is expected to provide convenience to taxpayers, especially for high-value transactions. This decision comes as part of the RBI’s ongoing efforts to promote digital payments and reduce reliance on cash transactions.
The central bank believes that this move will encourage more taxpayers to adopt digital payment methods for settling their tax liabilities. With the increased limit, taxpayers can now make larger tax payments in a single transaction, reducing the need for multiple payments.
Based on the various use-cases, the Reserve Bank has periodically reviewed and enhanced the limits for a few categories like capital markets, IPO subscriptions, loan collections, insurance, medical and educational services etc.
In addition to the UPI limit hike, the RBI is also exploring the introduction of ‘delegated payments’ through UPI. This feature will allow individuals to authorize another person to make payments using their UPI account, expanding the reach of digital payments.
“It is proposed to introduce “Delegated Payments” in UPI. “Delegated Payments” would allow an individual (primary user) to set a UPI transaction limit for another individual (secondary user) on the primary user’s bank account. This product is expected to add to the reach and usage of digital payments across the country. Detailed instructions will be issued shortly,” RBI said in a release.
First Published: Aug 08 2024 | 11:34 AM IST
