Now pay upto Rs 5 lakh for tax, healthcare, and education payments via UPI

Thanks to a new directive from the National Payments Corporation of India (NPCI), UPI users will be able to make payments of up to Rs 5 lakh per transaction for certain categories starting Monday, 16 September 2024.

This move, which increases the previous UPI transaction cap from Rs 1 lakh, aims to simplify high-value transactions, particularly in areas such as tax payments, healthcare, education, and financial investments.

The NPCI decision of 24 August 2024, cited UPI’s growing prominence as a preferred payment method across the country. The organisation highlighted that the increased transaction limit is specifically designed for sectors that frequently involve high-value payments.

As a result, UPI payments of up to Rs 5 lakh will be available for tax payments, medical bills, educational fees, and investments such as Initial Public Offerings (IPOs) and government securities (G-Secs).

The per-transaction limit for UPI payments will now be raised for entities classified under Merchant Category Code (MCC) 9311, which pertains to tax payments. In addition to taxes, the Rs 5 lakh limit will apply to hospitals, educational institutions, and investment-related transactions.

The NPCI has directed banks, UPI apps, and payment service providers to ensure that the updated limit is in place by 15 September 2024, so that consumers can start using the service the following day.

This new limit provides greater flexibility and ease for individuals making large payments in these sectors, further expanding the utility of UPI in everyday financial transactions.

However, users are advised to ensure that their banks and UPI apps support the new limit for these specific categories. The higher transaction cap will only apply to payments made through verified merchants that comply with MCC 9311’s stringent merchant categorisation rules, which require thorough verification and due diligence.

While this new Rs 5 lakh limit is a significant change, the standard UPI transaction limit for peer-to-peer payments remains at Rs 1 lakh. Currently, banks like HDFC and ICICI allow UPI transactions up to Rs 1 lakh, while others, such as Allahabad Bank, may offer lower limits.

The current daily transaction cap for specific UPI categories, such as capital markets, insurance, collections, and international inward remittances, remains Rs 2 lakh.

This increase in the UPI transaction limit highlights UPI’s expanding role in India’s payment landscape, providing consumers with a seamless, digital option for handling large-value transactions across sectors like tax payments, healthcare, education, and financial markets.