UPI Transaction Limit Raised to ₹5 Lakh: Here’s What You Need to Know

If you frequently use the Unified Payments Interface (UPI), there’s good news on the horizon. The National Payments Corporation of India (NPCI), which operates UPI, has announced an increase in the transaction limit for specific categories, allowing users to transfer up to ₹5 lakh per transaction. This increase is especially significant for tax payments, as it will now be possible to make tax-related payments up to ₹5 lakh in a single UPI transaction.

This enhanced limit applies exclusively to ‘verified merchants,’ meaning consumers can utilize UPI for substantial payments related to taxes, hospitals, educational services, Initial Public Offerings (IPOs), and government securities (G-Secs). Prior enhancements to UPI transaction limits were made in December 2021 and December 2023 through earlier circulars.

According to NPCI’s latest circular, the increase is aimed at accommodating UPI’s growing popularity as the go-to payment method across India. Recognizing this shift, the NPCI has instructed banks, payment service providers (PSPs), and UPI apps to ensure that the new transaction limit is effectively implemented for tax payments. The circular emphasizes the importance of acquiring entities classifying merchants under the Merchant Category Code (MCC) 9311, which pertains strictly to tax payments. Merchants must also ensure that UPI is enabled for tax payments with the updated limit. The circular further requests all members to comply with the new transaction limits by September 15, 2024.

This announcement follows the Reserve Bank of India (RBI) Governor Shakti Kanta Das’s monetary policy statement on August 8, 2024, where he revealed the decision to raise the UPI limit for tax payments from ₹1 lakh to ₹5 lakh per transaction. Governor Das highlighted that the increased limit would simplify and streamline payments for consumers using UPI.

With this move, UPI continues to evolve as a versatile and widely adopted platform for both daily and high-value transactions.