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

RBI

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RBI Increases UPI Transaction Limit For Tax Payments

The Reserve Bank of India (RBI) has recently increased the UPI transaction limit for tax payments from ₹1 lakh to ₹5 lakh. This decision aims to enhance the convenience and efficiency of digital payments, particularly for larger transactions, thus promoting the use of digital platforms in the tax payment ecosystem.

Key Highlights:

  1. New UPI Limit:
    • Previous Limit: ₹1 lakh
    • New Limit: ₹5 lakh
  2. Purpose:
    • To facilitate higher-value transactions.
    • To make tax payments more seamless through UPI.
  3. Impact on Users:
    • Easier to handle larger tax payments.
    • Encourages more taxpayers to adopt digital payment methods.
    • Enhances user experience by reducing the need for multiple transactions.
  4. Monetary Policy Committee (MPC) Decisions:
  • The six-member Monetary Policy Committee has decided to keep the repo rate unchanged at 6.5%.
  • The decision reflects a majority stance of 4:2 in favor of maintaining the withdrawal of accommodation.
  • Other rates such as the Standing Deposit Facility (SDF), Marginal Standing Facility (MSF), and Bank Rate also remain unchanged.
AspectPrevious Limit/RateNew Limit/RateDate of Announcement
UPI Transaction Limit for TaxesRs 1 lakhRs 5 lakhAugust 8, 2024
Repo Rate6.5%6.5% (unchanged)August 8, 2024
Standing Deposit Facility (SDF)UnchangedUnchangedAugust 8, 2024
Marginal Standing Facility (MSF)UnchangedUnchangedAugust 8, 2024
Bank RateUnchangedUnchangedAugust 8, 2024

Benefits Of The New UPI Limit:

  • Convenience: The higher limit allows for single, seamless transactions for larger tax payments, reducing the need for multiple transactions.
  • Efficiency: This change is expected to improve the overall efficiency of tax payments and encourage more taxpayers to adopt digital payment methods.
  • Digital Adoption: By facilitating larger transactions, the RBI aims to boost the adoption of digital payments across various segments of the economy.

According to NPCI, “For normal UPI the transaction limit is up to Rs 1 Lakh per transaction. For a few specific categories of transaction in UPI like Capital Markets, Collections, Insurance, Foreign Inward Remittances the transaction limit is up to 2 lakh and for Initial Public Offering (IPO) and Retail Direct Scheme the limit is up to Rs 5 lakh per transaction.

UPI Verification API By AuthBridge: Enhancing Digital Transactions

AuthBridge offers a robust UPI Verification API designed to streamline and secure the process of verifying UPI IDs (Virtual Payment Addresses). This service is crucial for businesses looking to enhance their customer, merchant, or vendor onboarding processes by ensuring that all UPI transactions are conducted with verified and legitimate UPI IDs. Here’s an in-depth look at what this API offers and how it benefits users.

Conclusion:

The RBI’s decision to raise the UPI transaction limit for tax payments is a significant step towards modernizing the financial infrastructure and promoting digital transactions. This move will make it easier for taxpayers to comply with tax regulations and support the government’s push towards a cashless economy.

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