What is the new UPI transaction limit for tax payments?

The limit has been increased from Rs 1 lakh to Rs 5 lakh for tax payments.

Why did RBI increase the UPI transaction limit for tax payments?

The increase aims to simplify and streamline the process of paying large tax amounts and reduce the need for multiple transactions.

How does the new UPI limit benefit taxpayers?

It allows taxpayers to pay larger sums in a single transaction, saving time and avoiding extra charges associated with other payment methods.

What steps do I need to follow to set up UPI for high-value tax payments?

Download a UPI-supported app, link your bank account, generate a UPI ID and PIN, verify your account, and start making payments.

Are there any new features with the increased UPI limit?

Yes, RBI has introduced delegated UPI payments, allowing users to delegate payment authority to others, enhancing flexibility.

What steps do I need to follow to set up UPI for high-value tax payments?

Download a UPI-supported app, link your bank account, generate a UPI ID and PIN, verify your account, and start making payments.

Are there any new features with the increased UPI limit?

Yes, RBI has introduced delegated UPI payments, allowing users to delegate payment authority to others, enhancing flexibility.

How much UPI transaction limit to avoid income tax?

There is no fixed UPI limit to avoid income tax, but frequent or large transactions may be tracked if they don’t match your income profile.

How much money can you transfer before it gets flagged?

There is no fixed amount, but large or repeated transfers may get flagged if they appear suspicious or inconsistent with your income.

Can I transfer 5 lakh through UPI?

Yes, you can transfer up to ₹5 lakh through UPI only for specific use cases like tax payments or approved merchant categories, subject to bank and RBI rules.

What is the new UPI limit for RBI to pay tax?

RBI has increased the UPI limit for tax payments to ₹5 lakh per transaction to make high-value government payments easier and faster.

Can I transfer 20 lakhs to my friend?

Yes, you can transfer ₹20 lakh to a friend using banking channels like NEFT or RTGS, as UPI does not support such high limits.

Can I transfer 20 lakhs through GPay?

No, GPay follows UPI rules, so transferring ₹20 lakh through GPay is not allowed; you must use NEFT or RTGS.

What is the full form of UPI?

The full form of UPI is Unified Payments Interface.

Can I transfer 10 lakhs in one day with ICICI?

ICICI Bank allows higher transfers up to ₹10 lakh per day only via NEFT or RTGS, not through regular UPI transfers.

What is the Gpay limit per day?

The GPay daily limit is usually ₹1 lakh per day for most banks, though it can vary based on bank policies.

Can I transfer 5 lakh per day?

In most cases, you cannot transfer ₹5 lakh per day via UPI unless it is a special category like tax payment.

Does my GPay limit depend on my bank?

Yes, your GPay limit depends on your linked bank account, as banks set individual UPI transaction caps.

Can we transfer 2 lakhs in one day in SBI?

Yes, SBI allows up to ₹2 lakh per day through UPI, subject to account type and security checks.

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RBI Increases UPI Transaction Limit For Tax Payments To Rs 5 Lakh

Komal Bajpai

Author

Updated: 14-01-2026 at 8:30 AM

Serving Over

500K+ Users

India’s digital payments ecosystem has witnessed another major leap forward. The Reserve Bank of India (RBI) has officially increased the Unified Payments Interface (UPI) transaction limit for tax payments from ₹1 lakh to ₹5 lakh. This landmark RBI UPI transaction limit update was announced on 8 August 2024 during the Monetary Policy Committee (MPC) meeting and has far-reaching implications for individuals, professionals, and businesses alike.

With UPI already dominating India’s digital payments landscape, the decision strengthens its role in digital tax payment India, especially for high-value transactions such as income tax, advance tax, self-assessment tax, and other government dues. The revised UPI tax payment limit RBI reflects growing confidence in the robustness, security, and scalability of the UPI framework developed by NPCI.

This article explains the new rule in detail, how it benefits taxpayers, how UPI tax payments work, and what this change means for the future of government tax collections.

RBI’s New UPI Transaction Limit: What Has Changed?

The RBI has raised the ceiling for UPI-based tax payments from ₹1 lakh per transaction to ₹5 lakh per transaction. This change applies exclusively to tax payments made to government authorities and does not automatically extend to regular merchant or peer-to-peer UPI transactions.

Key Highlights of the Update

Before diving deeper, here is a quick snapshot of what the RBI UPI tax payment rule introduces:

Particulars	Details
Previous UPI Limit for Tax Payments	₹1 lakh
Revised UPI Limit	₹5 lakh
Applicable From	August 2024
Applicable To	Direct & indirect tax payments
Announced By	Reserve Bank of India
Implemented Via	NPCI & banks

This new UPI limit for tax payments significantly reduces friction for taxpayers with large liabilities and supports smoother government collections.

How Does The New UPI Limit Benefits For Taxpayers?

The increase in transaction limits is not merely a technical update; it directly improves the taxpayer experience. Below is a clear breakdown of how this decision helps individuals and businesses.

Simplified High-Value Tax Payments

Paying taxes such as advance tax, self-assessment tax, or corporate tax often involves large amounts. Earlier, taxpayers had to split payments into multiple transactions due to the ₹1 lakh cap.

With the UPI payment limit for income tax now raised to ₹5 lakh, taxpayers can clear substantial dues in a single transaction. This reduces errors, saves time, and improves payment accuracy.

Cost-Effective Compared to Cards

UPI transactions generally attract zero or minimal charges, unlike credit cards, which may involve convenience fees or surcharges. For taxpayers, especially businesses, this makes government tax payment UPI a far more economical option.

Faster Settlement and Confirmation

UPI payments offer real-time settlement and instant confirmation. This is particularly useful during deadline-driven payments such as advance tax instalments or last-day income tax payments.

The updated RBI UPI transaction limit update ensures that speed and efficiency are not compromised even for high-value payments.

Understanding The UPI Payment Process For Tax Liabilities

To pay tax through UPI, you need a mobile number associated with your bank account, an active bank account and an app that supports UPI.

Once set up, income tax payment via UPI involves entering the amount, selecting UPI as the payment mode, and authorising the transaction using a UPI PIN.

It is much easier compared to using debit or credit cards, where all details, including card details, CVV code, date when it expires and most times a one-time password have always been required to make each purchase.

Furthermore, the UPI payment process for tax liabilities after the RBI's new limit is not only more streamlined, but it is also more convenient in terms of making payments that have higher transaction values.

Impact Of UPI Limit Increase On High-Value Tax Transactions

There are several positive effects of increasing the transaction limit for tax payments using UPI to Rs 5 lakh:

Ease of Use: Chartered accountants, consultants, freelancers, and business owners often deal with sizeable tax liabilities. The higher UPI tax payment limit RBI allows them to manage payments efficiently without resorting to net banking or RTGS.
Cost-Effective: This makes UPI a cheaper option compared with debit and credit cards, as no extra charges are imposed on transactions made through it by taxpayers.
Security: Consequently, UPI transactions have an added layer of security due to multifactor authentication, which guarantees safe processing and transfers of funds. This reinforces trust in digital tax payment in India and strengthens UPI’s credibility as a secure platform.
Promotion of Digital Transactions: It further positions UPI as a prominent tool in the Indian digital economy, thereby persuading people to go for digital modes of payment.

The impact of the UPI limit increase on high-value tax transactions is particularly beneficial for professionals, businesses, and individuals with significant tax liabilities, as it allows for smoother, hassle-free transactions.

How To Set Up UPI for High-Value Transactions Like Tax Payments?

The following steps will help you prepare your UPI account for government tax payment UPI smoothly:

Step 1: Download a UPI-supported app. Choose from popular apps like Google Pay, PhonePe, or BHIM.

Step 2: Link your bank account. You should ensure that your mobile number is linked to your bank account and that it has been enabled for use with UPI.

Step 3: Generate a UPI ID. Proceed with the application’s instructions to form your own UPI ID and create a PIN that is safe enough.

Step 4: Verify your bank account. Confirm that your bank allows high-value UPI transactions as per the RBI UPI circular.

Step 5: Start making payments. Once you have completed setting up, it is easy for you to enter the amount of tax and end up paying using your UPI pin.

Completing these steps ensures you can fully utilise the new UPI limit for tax payments without interruptions.

Role of NPCI and Banks in Implementing the New Limit

The National Payments Corporation of India (NPCI), which operates UPI, plays a crucial role in implementing RBI directives. Following the announcement, NPCI issued system-level instructions to banks to support the revised limit.

This NPCI UPI update ensures that backend infrastructure, settlement mechanisms, and fraud monitoring systems are aligned with higher transaction values.

Banks, in turn, are responsible for updating internal systems, customer limits, and risk controls to comply with the RBI UPI tax payment rule.

Additional UPI Features And Announcements

Besides raising the upper limit on UPI-facilitated tax payments, the RBI has also introduced delegated UPI payments. The said feature will enable primary users to delegate payment authority to another individual (e.g., family members) by accessing their bank accounts. This is projected to boost flexibility and use of UPI across different demographics.

The RBI's initiative to increase the UPI transaction limit for tax payments to Rs 5 lakh and the introduction of delegated payments are part of a broader strategy to strengthen India’s digital payment infrastructure. These changes not only make UPI more accessible but also position it as a leading platform for secure and efficient financial transactions.

This move complements the RBI UPI transaction limit update by expanding UPI’s usability across demographics.

What Does This Mean for the Future of Digital Tax Payments?

The decision to raise the UPI limit reflects the RBI’s confidence in UPI’s ability to handle large-value transactions securely. As tax compliance increasingly shifts online, UPI is expected to become the preferred mode for routine and high-value government payments.

In the coming years, digital tax payment in India is likely to see:

Wider UPI acceptance across government portals
Integration with more state and local tax systems
Enhanced real-time reporting and reconciliation

The UPI payment limit for income tax could also pave the way for broader use cases beyond taxes.

Conclusion

The increase in the UPI transaction limit for tax payments to ₹5 lakh marks a major milestone in India’s digital finance journey. Through this RBI UPI circular, the central bank has made tax compliance simpler, faster, and more cost-effective for millions of taxpayers.

By enabling seamless income tax payment via UPI, reducing reliance on cards and net banking, and strengthening trust in digital systems, RBI has reinforced UPI’s position as a cornerstone of India’s financial infrastructure.

As adoption grows, government tax payment UPI will not only ease compliance but also contribute to transparency, efficiency, and financial inclusion. For taxpayers, this update is more than a convenience; it is a step towards a smarter, digitally empowered tax ecosystem.

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