RBI Governor Shaktikanta Das Announces Increase in UPI Tax Payment Limits to 5Lakhs
Governor Shaktikanta Das Announces Increase in UPI Tax Payment Limits
Increased UPI Tax Payment Limit
On Thursday, during the unveiling of the RBI’s bi-monthly monetary policy decisions, Governor Shaktikanta Das made a significant announcement regarding UPI Tax Payment Limits. The good news for taxpayers is that the limit for tax payments through UPI is set to increase from Rs. 1 lakh to Rs. 5 lakh. This change will allow individuals to pay up to Rs. 5 lakh in a single transaction for various taxes, including income tax, property tax, and advance tax.
Growing Popularity of UPI Payments
The rise in UPI payment limits comes amid the growing popularity of digital transactions in India. UPI payments have seen a dramatic increase in usage, with people opting for this method for both small and large amounts due to its convenience and ease of use. Previously, taxpayers needing to pay amounts over Rs. 1 lakh had to use credit or debit cards or visit the bank, involving additional steps like providing OTPs and entering card details. The updated limit simplifies this process, as UPI payments only require entering a PIN for transactions.
Previous Increases and Broader Trends
This adjustment follows earlier increases in UPI payment limits. By December 2023, UPI had already facilitated payments of up to Rs. 5 lakh for medical expenses and educational fees. Additionally, the limits for capital markets, insurance, and international remittances had been raised to Rs. 2 lakh. The new limit for tax payments will align with these previous changes, reflecting a broader trend towards higher digital transaction limits.
Introduction of Delegated Payment System
In a further development, the RBI is planning to introduce a delegated payment system for UPI transactions. This system will enable one individual to authorize another person to make transactions from their account without requiring a separate bank account for the authorized person.
This feature will be particularly useful for managing family finances, as it will allow, for example, a parent to permit their children to make payments from their account. This anticipated change is expected to enhance the flexibility and reach of digital payments, further integrating UPI into everyday financial activities.
Conclusion
Overall, the RBI’s recent decisions underscore a significant shift towards embracing higher digital payment limits and expanding the functionality of UPI, reflecting the increasing role of digital transactions in India’s financial ecosystem.
