Income tax refunds will become faster as NPCI enables direct PAN-bank validation via a secure API for government departments.
The Income Tax Department has taken the e-filing portal a notch higher by introducing a new digital facility called National Payments Corporation of India (NPCI) that enables taxpayer verification on the e-filing portal. The new system will allow government departments to verify the details of Permanent Account Number (PAN) and bank account of their citizens by accessing directly via an application programming interface (API), as mentioned in a circular released on June 17, 2025.
It is an API with which one can acquire the real-time validation of key account information like the account holder’s name, the account’s status, and the PAN. Each member bank must make changes on the system level to adapt to this platform and provide the ability to chat with the Core Banking System (CBS) in real time. It will enhance the government’s accountability to citizen services, including direct benefit transfer and income tax returns.
Faster Refunds and Improved Fraud Prevention
NPCI is also compelled to force the participating banks to upgrade their IT infrastructure to the security standards demanded in the API-based verification system. This change will be pending additional investment in technology and employee training. Some compliance, testing, and data protection issues can accompany the transition period.
Some operational pressures will be experienced due to the improvement in the provision of public finance services, but the change will be a single step more inclined towards efficiency. This effort will be based on the broader plan of NPCI, which is to develop a secure and scalable digital payment ecosystem. It is also found therein that the efforts to achieve interoperability between financial and governmental institutions have not been exhausted.
The system of PAN-bank account verification is a nice twist on the evolution of digital governance. Its foundation is the more secure and transparent services for taxpayers. The collaboration of banks and state entities will become its dominant point of success.
Operational Adjustments Required by Banks
NPCI is forcing the banks involved to outsource their IT architecture to meet the security framework that would be addressed with an API-based verification framework. This will require an inevitable change that may necessitate new technological expenditures and staff training, which will precondition. During the transition, there might also be some leftover integration, testing, and data protection rules problems.
The upgrade will create operation-related pressures on the banks; however, this will be among the measures towards taking the right direction in the quest to become more efficient in the service delivery of public finance. The current action will correspond to NPCI’s larger strategy to create a safe, scalable, and electronic payment environment. It also reveals the expansion of the efforts dedicated to enhancing the interoperability between financial and governmental organizations.
