Introduction
In a landmark move set to redefine high-value digital transactions in India, the National Payments Corporation of India (NPCI) has announced a significant increase in Unified Payments Interface (UPI) transaction limits for specific categories. Starting September 15, 2025, users will be able to make payments of up to ₹5 lakh per transaction and an aggregate of ₹10 lakh within a 24-hour window for capital market investments, insurance premium payments, and certain government transactions. This development marks a pivotal moment for India’s digital payment ecosystem, signaling deep-seated confidence in the UPI infrastructure and catering to the evolving needs of consumers and businesses alike.
This change is not just a numerical adjustment; it’s a strategic enhancement designed to bring more convenience, efficiency, and flexibility to the financial landscape. Until now, the standard UPI limit for many of these transactions was capped at ₹2 lakh, a figure that often proved restrictive for substantial investments, large insurance premiums, or significant business-to-business (B2B) collections. The new five-fold increase in the per-transaction limit is a direct response to feedback from users and financial institutions, aiming to eliminate the friction of splitting large payments and streamlining the entire process.
The Breakdown: Which Transactions Get a Boost?
The enhanced limits are not universal but are targeted at specific Person-to-Merchant (P2M) categories where high-value transactions are common. It’s crucial for users to understand where these new rules apply:
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Capital Markets: This is a game-changer for investors. Transactions made to Asset Management Companies (AMCs), broking houses, and mutual funds will now fall under the new ₹5 lakh per-transaction limit. Whether you’re making a lump-sum investment in a mutual fund or trading in the stock market, this higher ceiling provides greater flexibility. It’s important to note, however, that the per-transaction limit for placing an IPO bid via UPI remains at its existing ₹5 lakh and is not part of this specific enhancement.
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Insurance Payments: Paying large annual or semi-annual insurance premiums has often been a cumbersome process, sometimes requiring multiple transactions or a switch to less convenient payment methods. With the new limit, individuals and corporations can settle high-value premiums for life, health, or general insurance in a single, seamless UPI transaction.
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Government e-Market Place (GeM): The limit for tax payments and other transactions under the merchant category code (MCC) 9311 has also been raised to ₹5 lakh per transaction, with a daily cap of ₹10 lakh. This facilitates easier and more efficient statutory payments.
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Credit Card Payments & Collections: The per-transaction limit for credit card bill payments has been increased to ₹5 lakh, with the 24-hour limit set at ₹6 lakh. Similarly, the “Collections” category, which includes loan repayments and B2B collections, now enjoys a per-transaction limit of ₹5 lakh and a daily total of ₹10 lakh.
It is essential to remember that these new limits apply only to transactions with verified merchants. The Person-to-Person (P2P) transaction limit remains unchanged at ₹1 lakh per day. This distinction ensures that while high-value commercial transactions are facilitated, the security and risk parameters for individual transfers are maintained.
The “Why” Behind the Change
This strategic move by the NPCI, with the backing of the Reserve Bank of India (RBI), is rooted in several key objectives. Firstly, it aims to deepen the penetration of digital payments by making UPI a viable option for a wider range of financial activities. By accommodating larger transactions, UPI becomes an even more powerful competitor to traditional payment methods like NEFT and RTGS, offering the added benefits of instant settlement and 24/7 availability.
Secondly, it enhances user convenience. The previous limits were a point of friction for many. An investor wanting to put ₹3 lakh into a mutual fund had to split the payment, adding complexity and potential for error. A business owner paying a large invoice had to resort to other means. This update removes that barrier, creating a frictionless experience that encourages greater adoption. Rohit Mahajan, Founder of plutos ONE, notes that this “frees consumer value and enable[s] high-value transactions to be easier, cheaper, faster and frictionless”.
Finally, this is a move built on trust. The decision to raise limits for verified merchants underscores the robustness and security of the UPI framework. The NPCI and partner banks have built a system capable of handling massive volumes securely, and this enhancement reflects their confidence in protecting users while processing high-value payments.
What This Means for You
For the average user, this change brings a new level of freedom. It simplifies financial planning, allowing for significant investments and payments to be made on the go, without being constrained by outdated limits. For businesses, especially in the B2B space, this is a major boost to operational efficiency. The ability to handle larger collections and payments via UPI can improve cash flow and reduce reliance on slower, more traditional banking channels.
All banks, payment service providers (PSPs), and third-party app providers are mandated to implement these changes by September 15, 2025. While the NPCI has set the ceiling, it has also granted individual banks the flexibility to set their own internal limits based on their risk assessment policies. Therefore, it’s advisable to check with your specific bank to understand the exact limits applicable to your account.
The journey of UPI from a simple P2P transfer mechanism to a comprehensive payment system capable of handling multi-lakh rupee transactions is a testament to India’s digital revolution. This latest enhancement is not just an update; it’s a powerful enabler for a new era of digital finance.