From Sept 15, users can send funds up to Rs 5 lakh through UPI for some transactions. Here’s what you need to know

From this Sunday (September 15, 2024), UP users will be allowed to transfer up to Rs 5 lakh in a single transaction, especially for tax payments. The National Payments Corporation of India (NPCI), which manages the UPI operations in the country, has recently increased transaction limits for tax payments after the Reserve Bank of India proposed the same in the August 8 Monetary Policy Committee meeting.

“Acquiring entities must ensure that the classification of their merchants within MCC-9311 strictly adheres to the tax payments only....Merchants shall ensure UPI as a payment mode is enabled for the increased limit for the tax payments category,” said NPCI in a circular.

The NPCI has communicated that due to the increasing popularity of UPI as a favoured payment mode, there is a necessity to elevate the per transaction limit within UPI for designated categories. Consequently, NPCI has recently disseminated a circular directive to banks, payment service providers (PSPs), and UPI applications to guarantee the augmentation of the per transaction limit specifically for tax payment transactions.

In its August 8 MPC note, the RBI said: “Currently, the transaction limit for UPI is Rs 1 lakh except for certain categories of payments which have higher transaction limits. It has now been decided to enhance the limit for tax payments through UPI from Rs 1 lakh to Rs 5 lakh per transaction. This will further ease tax payments by consumers through UPI.”

Key points to note

1. Consumers now have the convenience of making UPI payments of up to Rs 5 lakh per transaction across various categories, including tax payments, hospital and educational services, and IPOs and government securities.

2. Furthermore, two additional enhancements were introduced through circulars issued in December 2021 and December 2023 to streamline and enhance the UPI payment experience for users.

3. In December 2023, the central bank announced an increase in the payment limit to Rs 5 lakh for specific categories including transactions related to hospital expenses and educational institutions.

4. NPCI has taken a step further by introducing a new feature on its Unified Payments Interface (UPI) platform known as 'UPI Circle.' This innovative feature enables primary UPI account holders to securely delegate payment responsibilities to trusted secondary users, promoting ease of transactions and enhanced user control.

UPI Circle

Last month, the National Payments Corporation of India (NPCI) introduced the 'UPI Circle', a feature designed to enable primary UPI account holders to delegate payment responsibilities to secondary users securely. This innovation was announced by the Reserve Bank of India during its August Monetary Policy Committee (MPC) meeting. Through the concept of "Delegated Payments," a primary user can establish a UPI transaction limit for a secondary user to access the primary user's bank account. The implementation of this service is anticipated to enhance the penetration and utilization of digital payment systems throughout the nation. The central bank declared that comprehensive guidelines on this development will be released shortly during its MPC meeting.

Amazon Pay, Google Pay, and Bharat Interface for Money (BHIM), which is operated by NPCI, are currently testing UPI Circle within a closed user group. The official launch of this feature is slated for the upcoming months. Additionally, PhonePe, the leading third-party application on the UPI platform, is also in the process of testing this new product.