The National Payments Corporation of India (NPCI) has taken a significant step to improve taxpayer convenience. Income tax return filing will now include real-time verification of PAN and bank account details. This process, which previously took 10-12 business days, will now be completed within minutes.
NPCI has introduced an Application Programming Interface (API) integrated with all banks, making the PAN-bank account verification process on the income tax e-filing portal entirely digital and faster.
What is NPCI's new API feature?
An API, or Application Programming Interface, acts as a software bridge connecting two digital systems. NPCI's new API connects the income tax portal to banks' core banking systems (CBS). This allows for immediate verification of the PAN number, bank account, and account holder's name entered by the taxpayer.
The primary goal of this interface is to make the verification process transparent, faster, and more reliable. Previously a multi-day process, it can now be completed in minutes.
How does this API system work?
Whenever the income tax portal needs to verify a user's PAN or bank account, it uses the API to directly contact the relevant bank's core banking system. The bank then matches the PAN, account number, and account holder's name against its records and provides an immediate response.
This digital exchange automates the verification process, saving time and virtually eliminating human error.
NPCI's instructions and government's intent
NPCI has issued a circular directing all member banks to implement this new API feature as a priority. This facility is being provided to the Government of India, and its direct purpose is to digitally empower government departments, especially the Income Tax Department.
This will not only make the tax verification process more transparent but also increase public trust in government systems.
Benefits for taxpayers
Faster Verification: Taxpayers will no longer face long waits for PAN and bank account verification. The income tax portal will perform real-time verification, enabling quicker return processing.
Reduced Errors: Manual errors like incorrect account numbers or names have previously led to return rejections. Automated verification will virtually eliminate these mistakes.
Faster Refunds: Verified accounts are prioritized for refunds, so real-time verification will expedite tax refund processing.
More Secure Process: Data will no longer be transmitted via third parties; verification will occur through direct connection to the bank's core system, enhancing data security.
Benefits for Banks
This NPCI initiative directly benefits banks. They can now instantly confirm their clients' KYC documents, reducing fraudulent activities.
The API enhances bank credibility by enabling immediate data matching within their systems and fostering better coordination with government institutions.
Previous Process vs. the Change
Previously, taxpayers had to follow a separate procedure to link their PAN and bank account. Input was manually entered and verified by a third party. This process was time-consuming and often failed due to technical or human errors.
The new API system fully automates this process. Upon entering information on the portal, the API checks it with the bank in real-time, and the result appears on the portal within moments.
A significant step towards Digital India
This NPCI feature strengthens the Digital India initiative. It will not only accelerate the delivery of government services but also simplify technology for ordinary citizens.
The more transparent and digital the financial transaction process becomes, the ber and more reliable the government's e-governance system will be.
