Large taxpayers may soon shift to fully automated tax compliance

Illustration representing automated tax compliance, featuring a bank building, a gear, a check mark, and a computer displaying a chart, with the title 'Automated Tax Compliance' and the subtitle 'Streamlining Tax Systems for Large Taxpayers'.

India’s largest taxpayers—including corporates, foreign institutional investors and multinational companies—may soon move towards fully automated tax filings and compliance, as the central government opens up Application Programming Interface (API) access to its tax portals for third-party integration.

The government has already enabled API access for Goods and Services Tax (GST) systems. Similar access for direct taxes under the Central Board of Direct Taxes (CBDT) and for customs is expected to follow, according to people with direct knowledge of the matter. Industry experts say this move will allow consulting firms and technology providers to build Artificial Intelligence (AI)-driven tools that significantly reduce manual intervention in tax compliance.

The development is significant for large companies that currently depend on multiple government portals to track filings, notices and litigation across GST, income tax and customs. While most returns are filed online, several processes—such as monitoring tax appeals—still require manual tracking across disparate systems.

An email sent to the finance ministry seeking comment remained unanswered.

“Government-released APIs are a critical enabler in transforming tax compliance into a streamlined, technology-led function,” said a person familiar with the development. “They allow large taxpayers to integrate their internal accounting and compliance systems directly with the government’s tax ecosystem. When combined with AI tools, these integrations can enable near touchless compliance.”

For example, when an appeal is filed before the Income Tax Appellate Tribunal, taxpayers currently need to repeatedly visit the tribunal’s website to track updates. With API-based integration, such status updates could flow directly into a company’s internal systems in real time.

On the GST front, APIs already allow companies to monitor the MSME status of vendors and automatically comply with special provisions, such as ensuring payment of MSME dues within 45 days. Customs compliance is another area expected to see significant gains, as it has historically suffered from limited integration with GST systems—particularly for import-export focused businesses where the two regimes are closely linked.

A consulting firm told Moneycontrol that it has already developed a technology solutions suite using GST APIs and expects the scope to expand once API access is granted for direct taxes and customs.

“If the government opens up APIs for direct tax and customs, we will be able to integrate these into our existing applications,” said Prashanth Agarwal, partner, tax technology. “This would cover PAN validation, customs validation, return filings, bills of entry, and retrieval of government notices. It would help clients implement real-time controls, improve accuracy and speed of compliance, and better monitor litigation.”

For large taxpayers, the shift could mark a decisive move away from fragmented, manual compliance towards near real-time, system-driven tax governance.

Source: Money control