As the tax season intensifies, many taxpayers are discovering they can bypass the traditional “net banking” hurdle. While the standard Unified Payments Interface (UPI) limit remains capped at ₹1 lakh for most daily transfers, the National Payments Corporation of India (NPCI) has carved out a significant exception for government payments.
Taxpayers can now pay up to ₹5 lakh per day via UPI specifically for income tax and other government dues. This move is designed to make high-value compliance as seamless as buying groceries.
Breaking the ₹1 Lakh Ceiling
For years, the ₹1 lakh daily limit was a major pain point for mid-to-high-income earners. Large tax outgoes often required logging into complex net banking portals or visiting bank branches.
Under the updated 2026 guidelines, Verified Merchants in the government sector, which includes the Income Tax Department, are eligible for the enhanced ₹5 lakh per transaction limit. This allows users to settle substantial tax liabilities instantly through apps like Google Pay, PhonePe, or BHIM.
How to Ensure Success
While the NPCI allows the higher limit, the success of your payment often depends on your individual bank. Some lenders still maintain internal caps to prevent fraud.
To ensure your high-value tax payment doesn’t bounce:
- Check Bank Limits: Verify if your specific bank supports the enhanced ₹5 lakh limit for “Government/Tax” categories.
- Use the E-Filing Portal: Initiate the payment directly from the official Income Tax e-filing portal using the “Payment Gateway” mode.
- Cooling Periods: If you have recently changed your UPI PIN or linked a new bank account, wait 24 hours before attempting a high-value transaction.
The ₹5 Lakh Club
The Income Tax Department isn’t the only one benefiting from this digital push. The NPCI has extended the ₹5 lakh daily limit to other critical sectors:
- Healthcare: Payments to verified hospitals.
- Education: Fees for schools and universities.
- Capital Markets: Investments in IPOs and RBI Retail Direct schemes.
As India’s digital payment ecosystem matures, these higher caps are expected to further reduce the country’s dependence on physical paperwork and slow banking interfaces.
Source from: https://www.republicworld.com/business/upi-tax-payment-limit-increased-5-lakh-guide-2026
