NPCI Launches New API to Streamline PAN-Bank Account Validation on Income Tax Portal

In a significant move aimed at improving the efficiency and accuracy of tax-related processes in India, the National Payments Corporation of India (NPCI) has introduced a new digital facility that enables real-time PAN and bank account validation through an advanced Application Programming Interface (API). This initiative is designed to benefit both taxpayers and government departments, simplifying critical financial validation procedures on the income tax e-filing portal.

What Is the New NPCI API Facility?

NPCI, in a recently issued circular, unveiled a specialized API interface that allows the instant validation of Permanent Account Number (PAN), bank account status, and the account holder’s identity. This is made possible through direct integration with the Core Banking Systems (CBS) of individual member banks across the country.

How It Works

The API acts as a secure digital bridge between the government’s tax platforms and a bank’s internal systems, enabling seamless communication and data exchange. When a user initiates PAN validation or links a bank account on the income tax portal, the API sends a real-time request to the relevant bank’s CBS to verify:

• PAN Details

• Account Holder’s Name

• Account Status (Active/Inactive/Closed)

This process eliminates the need for manual intervention or offline verification, ensuring speed, accuracy, and security.

Purpose and Scope of the Initiative

According to NPCI, this new system is primarily targeted at Government departments, enabling them to validate customer account details more reliably. The official circular mentioned:

By mandating this integration, NPCI is ensuring uniform compliance among banks and offering the Government of India a trusted mechanism to verify financial identities across its digital platforms.

Benefits to Taxpayers

While the backend changes are being rolled out for government departments and banks, the real beneficiaries of this development are the taxpayers. Here’s how:

1. Faster PAN-Bank Account Linking

With the validation now happening instantly, taxpayers will no longer have to wait for hours—or even days—for their PAN and bank account to be linked. This is particularly important during Income Tax Return (ITR) filing season, when users are required to ensure their accounts are correctly linked for refunds and communication.

2. Reduced Manual Errors

Previously, minor discrepancies in name spellings, inactive accounts, or incorrect PAN details led to validation failures and delayed processing. The new API minimizes such human errors by automating the verification using bank-authorized data.

3. Quicker Tax Refunds

By validating the account status and ownership in real time, the system ensures that income tax refunds are credited faster and to the correct account, avoiding misrouted payments or failed transfers.

4. Improved Data Security and Trust

Since the API communicates directly with banking systems rather than third-party databases, it offers greater reliability and data protection. This reduces the risk of fraudulent accounts being used and increases the overall integrity of the tax administration ecosystem.

Implementation and Bank Involvement

NPCI has urged all member banks to prioritize the implementation of this API facility. As this service is being made available specifically for Government of India initiatives, it is expected that banks will act promptly to integrate this solution with their existing CBS infrastructure.