In a significant move to enhance digital payment capabilities, the Reserve Bank of India (RBI) has announced a substantial increase in the limit for tax payments via the Unified Payments Interface (UPI).
RBI Governor Shaktikanta Das revealed on Thursday that the new limit will rise from Rs 1 lakh to Rs 5 lakh per transaction.
Das emphasized the growing popularity and efficiency of UPI, stating, “UPI has rapidly become the preferred payment method due to its seamless features. Given its widespread adoption, the RBI has periodically revised limits for various categories, including capital markets, IPO subscriptions, and services like insurance and education.”
The revised limit aims to accommodate the high value and frequency of tax payments.
“With taxes being both common and substantial, this enhancement will facilitate smoother transactions,” RBI Governor further added.
The RBI will issue detailed instructions regarding the new limit shortly.
Additionally, the RBI is likely to introduce a new feature called Delegated Payments through UPI.
This innovation will allow a primary user to authorize a secondary user to make payments using the primary user’s bank account, thereby expanding the reach and utility of digital transactions.
“Delegated Payments will enable individuals to set transaction limits for others on their accounts, promoting greater adoption of digital payments,” RBI Governor explained.
UPI has seen explosive growth, with transaction volumes increasing tenfold in the past four years.
UPI Transactions Soar To 131 Billion, 80% Of India’s Digital Payments
According to the RBI’s Currency and Finance 2023-24 report, UPI transactions surged from 12.5 billion in 2019-20 to 131 billion in 2023-24, now representing 80% of all digital payments in India.
The report highlights a remarkable compounded annual growth rate (CAGR) of 50% in transaction volume and 10% in transaction value over the past seven years.
In 2023-24, digital payments totaled 164 billion transactions worth Rs 2,428 lakh crore.
This surge has been bolstered by initiatives such as the Payment Infrastructure Development Fund (PIDF), which has strengthened the country’s payment infrastructure.
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