UPI transaction limits, charges and the tax question

Three separate things get muddled together: how much can move, what it costs, and the tax question. Here they are one at a time, as of 29 October 2026.

In short: most banks allow up to ₹1,00,000 a day in UPI payments between people. Payments to a personal UPI ID are free. A merchant charge on payments above ₹2,000 was announced for 15 October 2026 and then postponed; no new date has been announced. Customers are never charged for paying by UPI from a bank account.

1. How much can move

NPCI sets a standard ceiling and each bank applies its own, sometimes lower.

Person to person: ₹1,00,000 a day at most major banks, with about 20 payments a day. It varies: Punjab National Bank's limit is listed at ₹50,000 a day, and smaller co-operative and regional rural banks are often lower.

Payments to verified merchants in some categories can go higher. From 15 September 2025:

Person-to-person payments stayed at ₹1 lakh a day.

A new UPI user can send only ₹5,000 in total in the first 24 hours after registering.

UPI Lite is separate: small PIN-free payments of up to ₹1,000 each, from an on-phone balance of up to ₹5,000.

Two NPCI rules for personal UPI IDs (circular OC 76A, in force since 1 April 2024):

• A QR picked from the phone's gallery can pay at most ₹2,000. Scanning with the camera isn't affected.
• Payments started from a link or button to a personal UPI ID are blocked altogether.

→Why payment links fail, and what works

These figures change. Check your own bank's current limit rather than relying on any list, including this one.

For you as the receiver: these limit what the payer can send. If a customer hits their limit, the payment fails on their screen and nothing leaves their account, so there's nothing to refund. They can pay part now and the rest the next day, use another bank account linked to their UPI app, or pay the rest another way.

Background limits you might notice

Since 1 August 2025, NPCI has limited some background actions in UPI apps, to keep the system fast at busy times:

The status-check rule is the one you'll notice: it's why a "pending" payment can take a few minutes to resolve.

If money leaves the payer's account but doesn't arrive, the payment is reversed automatically: by the day after for a payment to a person (T+1), within five days for a payment to a merchant (T+5). If the bank is late, RBI rules require it to pay ₹100 a day in compensation.

2. What it costs

Paying by UPI from a bank account is free for the customer, whether paying a person or a shop. UPI and RuPay debit card payments of up to ₹2,000 are also notified by the Ministry of Finance as free of charges for both sides.

The merchant charge (MDR): announced, then postponed

On 15 September 2026, NPCI published FAQs on a merchant discount rate (MDR) for some person-to-merchant (P2M) UPI payments:

• 0.4% on eligible merchant payments above ₹2,000, capped at ₹300 (reached at ₹75,000).
• A flat ₹5 above ₹2,000 for some categories, such as railways, telecom, insurance and fuel.
• A lower rate for capital markets (0.02%, capped at ₹300), and a concessional rate for education.
• Small merchants in UPI's small-merchant (P2PM) category receiving up to ₹1 lakh a month through UPI QR pay nothing.
• Person-to-person payments stay free, whatever the amount.
• The merchant pays it and can't pass it on to the customer; apps can't add a platform fee instead.

It was due on 15 October 2026. On 13 October 2026, NPCI postponed it to "immediately post Diwali", with the date to be notified separately. Some news reports said to expect the second week of November, but NPCI's own statement gave no date. As of 29 October 2026, no new date has been announced.

What's true and what's viral

3. Can I use a personal UPI ID for my shop?

You can, and many small sellers do. But know what you're taking on.

A personal savings account receiving daily business payments mixes your own money with your turnover. Sales, a transfer from your brother, a refund and money moved from your other account all look alike in one statement. That's fine until someone asks; then separating them is your job, from memory, possibly a year later.

Two practical points since 2024: payments to a personal UPI ID can't be made from links or buttons, and gallery-QR payments stop at ₹2,000. A verified merchant UPI ID, set up with full KYC by your bank or a payment company, avoids both.

A current account in the business name costs little and fixes three things at once: your records separate themselves, customers see your shop's name when they pay, and your account is classified the way a business should be.

4. The tax question

UPI credits leave a complete record, and tax departments use it.

What happened in Karnataka. In July 2025, Karnataka's Commercial Taxes Department sent notices to traders whose UPI receipts crossed the GST registration thresholds of ₹40 lakh a year for goods and ₹20 lakh for services. Many small vendors put up "No UPI, only cash" signs. After talks, the Chief Minister said arrears for the past two to three years wouldn't be pursued if the traders registered for GST, and that traders dealing only in exempt goods wouldn't be taxed.

A bank credit is not automatically taxable turnover. Personal transfers, loans, refunds and movements between your own accounts all look the same in a statement. But once a question is asked, explaining each one is your job.

What makes that easy or hard:

Keep business money in a business account. The single most useful thing.

Use the note field. A QR carrying "Flat 304" or "Fees Oct, Aarav" turns a wall of identical credits into a readable record.

→Bulk QR codes with a note per row

Reconcile monthly. Match UPI credits against invoices while you still remember what each was.

Know your GST threshold (₹40 lakh for goods, ₹20 lakh for services in most states, lower in some), and watch your scheme's limit if you're on composition.

Don't ignore a notice. A notice isn't a final demand; Karnataka's tax officials said the UPI data was "only one indicator". Answer it with your records, ideally with an accountant.

This is general information, not advice for your situation. If UPI is how most of your money arrives, an hour with an accountant is cheap.

→Invoice with a QR

→Make your QR