RBI Governor Shaktikanta Das announced the same on Thursday: it would raise the limit for tax payments made using UPI from Rs 1 lakh to Rs 5 lakh per transaction.
"UPI has evolved as the most preferred mode of payment because of its good system response and convenience. The limit for per transaction is presently Rs 1 lakh. It is, however, in many cases reviewed and revised from time to time based on varied needs, including capital markets, IPO subscriptions, loan collections, and insurance, medical, educational services," Das explained.
He added that since tax payments, direct and indirect, are of high value and are frequent in nature, he decided to increase the limit for UPI tax transactions to Rs 5 lakh. Detailed guidelines will be issued separately.
Further, in this area, the Reserve Bank of India is coming out with a facility that will be named Delegated Payments through UPI, whereby a secondary user will be able to make payments using the account of the primary user. This is going to enhance user reach and enhance digital payment use even more.
"UPI currently serves 424 million users, but there is still room for growth," Das noted. He explained that with this feature, called Delegated Payments, a primary user could set a UPI transaction limit for a secondary user. Thus, this would greatly increase the scope and extent of digital payments in the country. More instructions on this will follow.
The Unified Payments Interface, or UPI, has completely revolutionized the digital payment space in India, making transaction volumes tenfold in the last four years. According to the RBI's Currency and Finance Report 2023-24, volumes of UPI transactions surged from 12.5 billion in 2019-20 to 131 billion in 2023-24, cornering thereby 80 per cent of all digital payment volumes in India.
It is therefore stated in the report that digital payments in India have grown at an annual compounded growth rate of 50% in volume and 10% in value over the past seven years up to 2023-24 with 164 billion transactions valued at Rs 2,428 lakh crore. This kind of growth would have only been possible with the support that PIDF has provided to build up the nation's payment infrastructure.
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