RBI Boosts UPI: Higher Tax Limits and ‘Delegated Payments’ Unveiled

The Reserve Bank of India (RBI) has introduced two noteworthy enhancements to the Unified Payments Interface (UPI) system this week, with the aim of broadening its accessibility and functionality.

Elevated Limit for Tax Payments via UPI

In a development that will be welcomed by taxpayers, the RBI has raised the transaction limit for tax payments conducted through UPI from ₹1 lakh to ₹5 lakh per transaction. This fivefold increase is anticipated to simplify the process of making larger tax payments digitally.

“This will further ease tax payments by consumers through UPI,” remarked RBI Governor Shaktikanta Das while announcing the decision at the 50th meeting of the Monetary Policy Committee on Thursday.

Introduction of the “Delegated Payments” Feature

The second significant change introduces a novel “Delegated Payments” feature to UPI. This innovation will empower a primary user to authorize another individual (secondary user) to execute UPI transactions from the primary user’s bank account, up to a predetermined limit.

“This would enable an individual to allow another individual to make UPI transactions up to a limit from the primary user’s bank account without the need for the secondary user to have a separate bank account linked to UPI,” Governor Das elaborated.

This feature is projected to substantially boost UPI adoption, particularly among demographics like children and senior citizens who might not possess their own bank accounts linked to UPI.

Dilip Asbe, CEO of the National Payments Corporation of India (NPCI), the entity responsible for operating UPI, commented on social media: “Never a dull moment for payment systems in India.”

PhonePe co-founder Sameer Nigam lauded the Delegated Payments feature, asserting that it “will significantly accelerate UPI adoption by the next 300-400 million Indians.”

These strategic moves by the RBI underscore its commitment to fostering financial inclusion and digital payments in India. By expanding the UPI system’s capabilities and reach, these changes are poised to further accelerate India’s journey towards a less-cash economy.