Large taxpayers will soon be required to follow fully automated tax filing and compliance processes. This category includes companies, foreign institutional investors (FIIs), and multinational corporations.
To support this move, the central government has opened application programming interface (API) access to its tax portal for third-party service providers.
The government has already provided API access to the Goods and Services Tax (GST) system.
Now, according to people familiar with the matter, similar access may be extended to direct taxes handled by the Central Board of Direct Taxes and Customs.
Use of AI Tools and Reduced Manual Work
Experts say that with API access, consulting firms and technology providers will be able to develop artificial intelligence (AI)-based tools for tax compliance. This will significantly reduce human intervention in tax filing and compliance.
Currently, large companies have to use multiple government portals for different tasks such as income tax filings, GST-related notices and disputes, and customer tracking. API integration is expected to streamline these processes.
Manual Tracking Still a Challenge
Although most tax returns are now filed online, several processes still require manual effort. For example, tracking tax appeals often involves repeated manual checks.
When an appeal is filed with the Income Tax Appellate Tribunal, taxpayers currently need to visit the tribunal’s website multiple times to check for updates.
With API-based integration, these updates can be sent directly to a company’s internal systems, making the process more efficient.
An email sent to the Finance Ministry for comments on this development did not receive a response.
However, a person familiar with the matter said that the APIs released by the government will transform tax compliance by making it more technology-driven.
Integration with Internal Systems and AI
The APIs will allow large taxpayers to directly connect their internal accounting and compliance systems with the government’s tax ecosystem.
Consultants can also combine this access with AI tools to create systems that require much less manual intervention.
Benefits Already Seen in GST System
Under the GST framework, API access already helps companies track the MSME status of their vendors
and automatically comply with rules such as paying MSME dues within 45 days. Customer compliance is another area that has benefited from this system.
Expansion of Technology Solutions
Consulting firm PwC told Moneycontrol that it has already developed a technology solutions suite using the GST API. PwC believes that the scope of these solutions could expand further once API access is granted for direct taxes and customs as well.
