UPI tax payment limit raised to Rs 5 lakh, repo rate unchanged

General UPI transaction limit remains unchanged at Rs 1 lakh

The Reserve Bank of India (RBI) Governor, Shaktikanta Das, announced a significant increase in the Unified Payments Interface (UPI) tax payment limit, raising it from the existing Rs 1 lakh to Rs 5 lakh. This change applies to individual income tax, wealth tax, and advance tax payers, as decided in the RBI Monetary Policy Committee meeting held on Thursday.
In a continuation of its previous stance, the RBI has kept the repo rates unchanged, marking the ninth consecutive time without a rate change. Since February of the previous year, there have been no alterations to the interest rates by the central bank. Governor Das noted that while inflation remained stable in April and May, it saw an increase in June, primarily due to a rise in food prices.
The enhancement of the UPI payment limit to Rs 5 lakh is expected to simplify tax payments, allowing taxpayers to pay substantial amounts without additional hassle. Importantly, no extra charges will be levied for UPI transactions under this new limit. However, payments made via debit or credit cards will still incur some charges. This adjustment follows previous increases, such as in December 2023, when the UPI payment limit for transactions involving hospitals and educational institutions was similarly raised to Rs 5 lakh. Despite these changes, the general UPI transaction limit remains unchanged at Rs 1 lakh.
In another crucial announcement, Governor Das addressed the issue of check clearance, emphasizing the need for a streamlined process. He proposed that check clearance should be completed within hours rather than the current timeframe of 2 to 3 days, advocating for continuous check clearance operations. This move aims to enhance the efficiency and reliability of the banking system.
Governor Das also pointed out the lax adherence to rules by financial institutions regarding the issuance of top-up loans and gold loans. While alternative investment opportunities for retail investors are on the rise, bank deposits are witnessing a decline. This trend poses challenges for banks in meeting the increasing demand for credit, as highlighted by the RBI Governor.