NPCI Launches New PAN-Bank Account Verification Feature for Faster Income Tax Refunds

KKN Gurugram Desk | The National Payments Corporation of India (NPCI) has introduced a game-changing feature to simplify and accelerate the Income Tax refund process. This new service allows taxpayers to quickly verify their PAN and bank account linkage directly via the Income Tax e-filing portal, enabling real-time authentication and reducing delays in refund disbursement.

This move is set to benefit millions of taxpayers across India, offering a secure, error-free, and faster mechanism for validation, thereby strengthening trust and efficiency in the country’s digital financial infrastructure.

 What Is the New NPCI PAN-Bank Account Verification Feature?

According to a circular issued by NPCI, the organization has introduced a new API (Application Programming Interface) that enables real-time PAN and bank account verification through integration with banks’ Core Banking Systems (CBS).

This solution will help validate three crucial components in real time:

1. PAN details of the taxpayer

2. Bank account status (active/inactive)

3. Name of the account holder

The feature is specifically designed for government platforms like the Income Tax Department, allowing seamless integration and real-time cross-checking of financial information. This initiative ensures that income tax refunds and other financial disbursements are deposited into the correct and verified bank accounts.

How Will It Help Taxpayers?

Taxpayers linking their PAN with their bank account via the Income Tax e-filing website will now experience instant verification of their submitted details. Earlier, such validations could take hours—or even days—and often required manual intervention or clarification in case of discrepancies.

This advancement:

• Ensures fast-tracked refund issuance

• Reduces rejection of refunds due to incorrect or unverified account details

• Minimizes fraudulent transactions

• Brings more transparency and ease to digital tax filing

 Expert Opinion: Why This Is a Major Upgrade

Speaking to The Economic Times, Utkarsh Bhatnagar, Partner at law firm Cyril Amarchand Mangaldas, said:

“This API-based real-time verification will reduce errors and fraud in direct tax refunds. It will streamline the process and make the Income Tax Department more responsive and efficient.”

He added that the initiative is expected to significantly improve trust between the taxpayer and government institutions, encouraging more citizens to file taxes digitally.

 NPCI’s Circular: Objective and Benefits

The circular from NPCI elaborates that the main objective is to:

• Enable faster disbursal of refunds through real-time validation

• Enhance the security and authenticity of digital transactions

• Improve interdepartmental coordination by offering a standardized interface

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Moreover, banks will need to upgrade their systems to comply with the security and data exchange protocols outlined by NPCI.

 Tax Filing Made Easier with Excel Utility for AY 2025-26

In another update aimed at easing the taxpayer journey, the Income Tax Department has released Excel-based ITR filing utilities for Assessment Year 2025-26. This feature supports:

• ITR-1: For individuals with salary income

• ITR-4: For presumptive income (small businesses and professionals)

Previously, filing required extensive data entry online or using JSON utilities. Now, taxpayers can prepare returns offline in Excel and upload them directly.

 The deadline for ITR filing this year has also been extended from July 31 to September 15, 2025, providing more time for salaried and small business filers.

 What Does It Mean for Fraud Prevention?

Fraudulent refunds have been a recurring issue, with several cases of incorrect PANs, inactive bank accounts, or third-party names being detected. With real-time NPCI authentication, the following security features are strengthened:

• Instant verification of account ownership

• Elimination of mismatched PAN-bank linkages

• Reduced possibility of fraudulent refund redirection

By bridging the gap between the Income Tax portal and the banking ecosystem, the NPCI’s initiative sets a new national standard for taxpayer safety and process efficiency.

How to Use the New PAN-Bank Verification Feature

Here’s a quick guide for users looking to benefit from the new system:

1. Login to the Income Tax e-filing portal

2. Go to “Profile” → “Bank Account Details”

3. Click on “Add Bank Account” or select “Re-verify” for existing ones

4. Ensure your PAN is linked with the bank account you choose

5. The system will now validate details instantly via NPCI interface

6. Once verified, your account will become eligible for refund credit

With this new feature, NPCI and the Income Tax Department are working together to build a more responsive, transparent, and efficient tax ecosystem. While the adoption of real-time APIs may require banks to invest in tech upgrades, the ultimate benefit to millions of Indian taxpayers is unquestionable.

As the digital tax revolution continues, India sets another benchmark for e-governance, making it easier than ever to be a responsible and compliant taxpayer.