How Payment Apps Unlock Retention Gains with Embedded Tax Filing
- Ankita Murkute
- 19 hours ago
- 8 min read
Payment apps have evolved beyond tools to send or transfer money. They have now transformed into everyday financial hubs where users pay bills, save time, and even manage financial obligations. India’s payment landscape is evolving fast, with UPI becoming the backbone of digital payments. As per a press release by the Ministry of Finance, 24,162 Crore UPI transactions worth ₹314 Lakh Crore+ have been clocked in FY26, highlighting the growing reliance on UPI transactions across rural and urban regions.
As adoption increases across the country, payment apps are expanding beyond transactions into adjacent financial services such as micro-investments. This shift creates a clear strategic opening: converting a utility app into a daily financial companion. By embedding tax filing into this experience, platforms can turn a once-a-year chore into a seamless, high-trust service that keeps users coming back, deepens engagement, and opens a new path to retention-driven revenue.
TaxBuddy, an authorised e-Return Intermediary (ERI) registered with the Income Tax Department of India, has pioneered white-label integrations with leading payment apps like PhonePe, Jio Finance, and BHIM App. It helps users file taxes without leaving payment apps while enjoying security and convenience.
Table of Contents
Solving For the Micro-Investment Tax Filing Challenge
When a user invests money in small amounts in the form of micro-SIPs, weekly investments, or small stock purchases on a payment app, they intend to build a corpus over time. Instead of investing ₹50,000 or ₹1 Lakh at once, the invested amount is ₹500, ₹1,000, or ₹2,000 on a monthly basis.
Whether it is a monthly contribution of ₹500 in mutual funds, a weekly investment of ₹250, or buying one company share worth ₹500, investing using this approach improves accessibility and ease. That said, payment apps offering micro-investing capabilities can solve a unique problem for customers. Though users invest small amounts regularly, they face challenges when reporting them. Micro-investments create tax complexity, meaning there are tax obligations even with investing a small sum. See the table below:
Investment Type | Example | Tax Implication |
Mutual Fund SIP | ₹1,000/month for 1 year = ₹12,000 | Long Term Gains may be taxable if gains exceeds ₹1.25 Lakh |
Stock Trading | Buy ₹5,000, sell for ₹7,000 | ₹2,000 profit is taxable (short-term if <1 year) |
Multiple Small Investments | 5 different mutual funds, ₹500 each | Need to track gains from all 5 separately. |
Disclaimer: The above-mentioned details have been added for illustrative purposes only.
The gap between digital investing and manual tax filing is widening due to these reasons:
Fragmented Experience
Investors may use payment apps like Jio Finance or PhonePe for investing and separate apps or websites for tax filing. This adds friction to the user journey. Bringing tax-filing and tax-planning features into one app can simplify the experience for users, keeping them coming back to the same app all through the year.
Complexity of Understanding Capital Gains
For most investors, tax season becomes a source of stress simply because they are unsure of how to calculate their capital gains accurately. Investors also face difficulties distinguishing long-term capital gains from short-term gains. The absence of a consolidated statement requires them to compile data manually from multiple sources, leading to frustration and errors. By helping users understand when gains become taxable and the consequences of misusing capital loss reporting, payments apps can increase their relevance and appeal.
High Costs of Filing Income Tax Return
The cost involved in filing taxes can make the entire experience expensive for small-time investors.
Problem Associated with Documentation
Reconciling different statements manually, such as Form 16, Annual Information Statement (AIS), and capital gain/loss statement, is a laborious task, increasing the chances of errors.
Choosing the Right Regime
To choose the right regime, taxpayers need to understand income, investments, and deductions. This can be confusing for beginners. With a tax filing module embedded in the app, users can easily select the right regime and leverage deductions.
For payment apps, these problems signal larger challenges:
Users leave the app to file taxes, reducing engagement
Users may stop micro-investing if tax filing feels too challenging
Companies miss opportunities to understand user finances and offer relevant products (loans, insurance, better mutual fund schemes)
Competitors win when they offer comprehensive financial services in one app
Seamless Tax Filing Integration Through TaxBuddy
Embedded tax filing allows users a way to file Income Tax Returns (ITR) directly within the payment or investment app, without redirects to external websites. Previously, this was the journey a user had to go through:
Invest on payment app → Close payment app → Open tax-filing app → File taxes → Go back to payment app
Post-integration, the process becomes simpler:
Invest on payment app → Click ‘File Taxes’ on payment app → File taxes → Done
(all in one place)
TaxBuddy powers this integration through white-label APIs (Application Programming Interface) that maintain the host app's branding while delivering full tax filing functionality. This embedded solution offers key modular components that platforms can integrate.
While the ITR filing module offers DIY, expert- and AI-assisted filing, the tax-planner module enables users to plan their taxes well in advance. Here’s a quick snapshot of other benefits that investors get to enjoy.
Module | Key Features | Business Value |
ITR Filing Engine |
| Higher customer engagement with value-add service |
Tax Planner |
| Higher retention all year round with proactive tax planning |
TaxBuddy’s robust technical integration capabilities ensure:
Secure, token-based SSO
Meaning a single sign-on is required without password sharing
Seamless user experience
Ensuring that the investor stays inside the partner platform
Real-time authentication validation
Enabling instant verification
Scalable APIs
Ensuring data, reports, and notifications are generated effortlessly
Quick integration timeline
Approximately 2-3 weeks for API-led integration and 3-5 days for Webview
Key Benefits of In-App Tax Filing Feature for Payment Apps
Embedding TaxBuddy's tax filing API transforms payment apps from transactional tools into complete financial platforms. This helps deliver measurable business outcomes across retention and customer lifetime value. Here’s a snapshot of key advantages:
Benefit | Impact |
Higher repeat engagement | Users who file taxes in-app are more likely to use the same app next year |
Reduction in churn | Embedded tax filing service creates annual re-engagement guarantee |
Higher engagement across the year | Users return for tax planning (April–Oct), filing (Apr–Jul), refunds, and reinvestment |
Trust transfer | Users who trust the app for payments are more likely to also trust it to file taxes |
Not only are UPI and eWallet transactions monitored by the Income Tax Department (as per Section 92(2)(m) of the Income Tax Act 2026, but they are also subject to tax in the same way as mutual funds. Many payment apps already allow users to pay advance tax using credit cards or UPI. Given both these existing links, a tax-filing integration helps users complete another important step in their financial wellness journey. Since users do not need to login to another portal, the payment app becomes a one-stop financial solution.
How Payment Apps Can Integrate TaxBuddy’s Tax-Filing APIs
For businesses wanting to add an in-app tax filing feature, the process is straightforward. Simply follow these steps.
Step 1: Confer with TaxBuddy’s team of experts
Discuss desired features
Define the filing journey inside the app
Step 2: Technical Setup (2-3 Weeks)
Get API access
Connect app's login system via SSO
UI Design the tax filing screens to match your brand identity
Step 3: Testing
Test Android and iOS user flow
Fix bugs
Step 4: Launch
Make feature available to all users
Monitor and improve the solution, if needed
With TaxBuddy, payments apps can enjoy the following services:
Complete tax filing module with AI-powered DIY services along with expert-assisted filing
All government compliance and changes in rules are auto updated
Expert support before, during and after integration
Future of Payment Apps
With UPI transactions hitting a record of ₹29.53 Lakh Crore in March 2026, it is clear that digital transactions are not just a convenience but the way Indians transact in general.
Since payment apps are a clear choice of consumers for daily transactions, the next step is to bring related financial services, investments, insurance, and tax filing, under one roof. Payment apps that evolve to full-stack financial platforms have the chance to truly stand out.
By offering a complete financial ecosystem, including tax filing and tax planning, apps can differentiate themselves, deepen user trust, and capture more of the user’s financial journey. Leveraging India’s digital public infrastructure, UPI, Aadhaar, and Account Aggregator/Open Banking APIs, payment apps can integrate tax services in a way that feels native, secure, and effortless for users.
Conclusion
Users now invest, save, borrow, and pay from the same payment apps they use every day. But when it comes to taxes, the journey is still broken. Users must leave the app, manually collect data of their investments, and navigate the tax filing process on their own. This creates friction for users and missed opportunities for platforms.
TaxBuddy can help bridge this gap. As an authorised ERI with proven white-label deployments across leading payment apps, TaxBuddy enables users to file returns, plan taxes, and stay compliant, without ever leaving your app. For payment apps, embedded tax filing strengthens annual re-engagement, reduces churn, and increases lifetime value, all while positioning the app as a trusted, end-to-end financial partner.
If you’re building the next generation of payment experiences, integrated tax filing is a logical next step. To explore how TaxBuddy’s APIs and white-label solutions can work within your product, request a demo.
Frequently Asked Questions
What is in-app tax filing?
In-app tax filing means you can file your income tax return (ITR) directly inside your payment app without visiting a separate website. TaxBuddy powers this feature for apps like Research360, Jio Finance, and several other fintech, banking, HRMS, and gig economy platforms.
How does in-app tax filing work for micro-investments?
When a user invests through a payment app that has embedded tax-filing, they login in sharing their PAN and by uploading other statements, such as Form 16. This data is automatically imported and pre-filled into relevant income tax forms. Thus, users can file taxes assisted by AI seamlessly and without leaving the app.
Is embedding TaxBuddy’s in-app tax filing feature safe and secure?
Yes. TaxBuddy uses secure technology, including encryption and token-based login, and follows all rules prescribed by the government. All data is protected, and the system is audit-ready for compliance.
Is it possible for the user to check their tax refund in the payment app?
Yes, when payment apps embed TaxBuddy’s tax-filing APIs, users can see their tax return status and track when the refund will arrive, all inside the same app.
If the user on a payment app is a first-time tax filer, will this solution work?
Yes. TaxBuddy's AI-guided filing is designed for first-time users. The system pre-fills everything based on available data. Expert support is also available if users need help.
How long does it take to add TaxBuddy’s tax-filing API to a payment app?
While the Webview integration takes about 3 to 5 days, the full API integration is completed in 2 to 3 weeks.
Will the payment app's branding stay visible when integrating with TaxBuddy?
Yes. The tax filing feature looks like it belongs in the app. It uses the colours, fonts, and brand identity of the app. TaxBuddy stays behind the scenes unless there is a co-branding arrangement.
What features can payment apps add with TaxBuddy?
Payment apps can choose any combination of ITR Filing (DIY + expert-assisted) and Tax Planner (tax-saving suggestions) along with other features like Wealth Builder and Portfolio Doctor. The first two relate to taxes while the last two relate to investments.
Why should payment apps add tax filing services?
Payment apps can add tax-filing to their interface to offer users a complete financial wellness platform. Two main benefits of including tax-filing are:
Users stay longer in your app, leading to higher engagement
Users are less likely to switch to competitors who offer multiple financial services under one roof, leading to better retention
Which apps have already integrated TaxBuddy’s tax-filing feature?
Research360, Jio Finance, and several other fintech, banking, HRMS, and gig economy platforms.
If a user switches from AI-assisted DIY filing to Expert Help, do they have to leave the app?
No. The expert-assisted assistance layer is completely embedded. If a user encounters a complex situation and requests human professional assistance, the support workflow is delivered directly within the host app's interface (via Webview or API channels), ensuring the user never leaves your ecosystem.
Comments