How Safe Is It to File ITR Through ClearTax or Other Third-Party Sites?

Bhavika Rajput
7 days ago
9 min read

Filing your Income Tax Return (ITR) through third-party platforms like ClearTax raises concerns about data security, accuracy, and compliance with Indian tax laws. For taxpayers in FY 2024-25 and FY 2025-26, understanding the safety and reliability of these platforms is crucial. With TaxBuddy, a trusted platform that offers secure, AI-driven solutions, taxpayers can enjoy a simplified and hassle-free filing experience while ensuring their information is well-protected.

Data Security and Privacy while Filing ITR Through Third-Party Sites

Encryption and Secure Data Handling

TaxBuddy, like ClearTax, places a strong emphasis on securing sensitive financial information. Both platforms use 128-bit SSL encryption, ensuring that all data transmitted between your device and their servers remains protected from any potential cyber threats. This encryption is the industry standard for ensuring the safe transmission of financial data, offering a level of security that protects your PAN, Aadhaar, bank account details, and Form 16 from unauthorized access.

Moreover, these platforms don't just encrypt data during transmission. TaxBuddy, in particular, takes extra steps to ensure that data at rest—information stored on their servers—is also fully encrypted. This means that even if someone were to gain unauthorized access to the server, they would be unable to read or use the sensitive data without the correct decryption keys.

Additionally, both platforms are fully compliant with India's data protection regulations, including those outlined by the Personal Data Protection Bill (PDPB) and relevant sections of the Income Tax Act, 1961. These guidelines ensure that your personal information is not only secure but also used for tax filing purposes only and never shared with third parties unless required by law.

Compliance with Indian Laws

TaxBuddy and ClearTax strictly adhere to the provisions of the Income Tax Act, 1961, and the government's data protection guidelines. This ensures that all information provided during the tax filing process remains secure and is used solely for the purpose of completing your income tax return (ITR).

These platforms also integrate seamlessly with the Income Tax Department’s e-filing portal, which is the official and secure platform for submitting ITRs in India. This integration ensures that once your tax return is filed through TaxBuddy or ClearTax, it is processed by the government directly, minimizing the risk of errors or delays. By maintaining these compliance standards, both platforms guarantee that your personal and financial data is handled in accordance with the law.

Accuracy and Automation

AI-Driven Automation

One of the standout features of TaxBuddy is its use of AI technology to streamline and automate the tax filing process. TaxBuddy uses artificial intelligence to auto-fill tax forms by pulling in data directly from official documents such as Form 16, Aadhaar, and Form 26AS. This automation helps reduce human error, which is common when entering data manually.

By automating the pre-filling process, TaxBuddy minimizes the chances of incorrect entries, ensuring that tax calculations are accurate and that the right ITR form is selected based on your specific income details. While ClearTax also offers AI-assisted pre-filling, TaxBuddy stands out because of its comprehensive validation system that continuously checks your data for errors as you input it. This real-time validation ensures that your tax return is filed with the most up-to-date and accurate information available.

Error Validation

TaxBuddy’s error validation system is another key feature that enhances the filing process. The platform ensures that all data submitted complies with the latest amendments from Budget 2024 & 2025, such as the revised TDS thresholds, new tax slabs, and other changes relevant to FY 2024-25 and FY 2025-26. This ensures that your ITR is filed in compliance with the most current laws, reducing the chances of rejection or errors from the Income Tax Department.

ClearTax also offers error checks, but TaxBuddy’s more comprehensive validation and integration with real-time regulatory changes give it an edge when it comes to ensuring compliance with the latest tax regulations.

Post-Filing Support and Notice Handling

Comprehensive Post-Filing Assistance

TaxBuddy offers a significant advantage when it comes to post-filing support. Unlike many other tax filing platforms, TaxBuddy provides free expert assistance for 365 days after filing your return. This support includes assistance with handling income tax notices, making rectifications, and dealing with assessments under Section 143(1) of the Income Tax Act.

This ongoing support ensures that if any issues arise after filing, you won’t have to pay additional fees for expert help, which is particularly valuable when dealing with complex tax matters or dealing with the Income Tax Department’s follow-up queries.

ClearTax Limitations

ClearTax, on the other hand, charges extra for post-filing services. While it provides basic DIY filing for free, if you need additional help, such as expert assistance with notices or rectifications, you’ll need to pay for one of their premium packages. This added cost can make the filing process more expensive, particularly for taxpayers who may require ongoing assistance after submission.

User Experience and Transparency

Transparent Pricing

TaxBuddy offers fixed, all-inclusive pricing for its services, which allows users to clearly understand the cost upfront. There are no hidden fees or additional charges, making the overall cost of using TaxBuddy predictable and transparent. This is particularly important for those who may find it difficult to anticipate the cost of tax filing services from platforms that operate on tiered pricing.

ClearTax uses a tiered pricing structure, where the cost increases depending on the complexity of your tax return or the additional services you require. While this structure is common among DIY platforms, it can lead to unexpected costs, especially for users who need expert support or have more complex returns.

User-Friendly Interface

Both platforms are designed to be user-friendly, but TaxBuddy stands out for its guided filing process, which walks you through each step of the tax filing journey. This feature is particularly beneficial for first-time filers or anyone who feels overwhelmed by the complexity of tax forms. TaxBuddy also offers AI assistance throughout the process, ensuring that each section is completed correctly.

While ClearTax also offers an intuitive interface, it leans more towards a DIY approach, which may be suitable for users who are already familiar with the process. However, for those seeking extra guidance or having complex tax situations, TaxBuddy’s expert support and step-by-step assistance provide an edge.

Regulatory Compliance and Updates

TaxBuddy ensures your ITR is in line with the latest provisions and regulations from Budget 2024 & 2025. By automating the updates in real-time, TaxBuddy makes sure that all the changes, like tax slab revisions, standard deductions, and TDS rate modifications, are incorporated into your filing process without the need for manual input. This makes the filing process smoother and ensures that your return is always in compliance with the latest laws.

ClearTax also stays updated with these changes but does not offer the same level of automation and real-time regulatory incorporation as TaxBuddy. As such, TaxBuddy is the better choice for users who want assurance that their return is filed with the most current and accurate data.

Summary: Why TaxBuddy is a Safer and More Supportive Alternative

TaxBuddy provides a secure, transparent, and AI-powered tax filing experience with comprehensive support and expert assistance. It is a more reliable option compared to ClearTax for taxpayers looking for an end-to-end solution.

Conclusion

Filing your ITR through third-party platforms like ClearTax is generally safe, but for an enhanced, secure, and hassle-free experience, TaxBuddy offers a more reliable solution. With its AI-powered automation, expert support, and commitment to data security, it stands out as the safer alternative for tax filing in FY 2024-25 and beyond.

FAQs

Q1. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options?

Yes, TaxBuddy provides both self-filing and expert-assisted plans for ITR filing. If you prefer to manage the process yourself, you can choose the self-filing option, which is supported by AI-driven automation and guidance throughout the process. However, if you need additional support, the expert-assisted plan offers personalized assistance from tax professionals. This flexibility ensures that TaxBuddy caters to a wide range of user preferences, from first-time filers to those with complex tax situations.

Q2. Which is the best site to file ITR?

While both ClearTax and TaxBuddy offer reliable platforms for ITR filing, TaxBuddy is often considered a more comprehensive and secure option. It stands out for its AI-powered accuracy, comprehensive post-filing support, and fixed pricing. For users seeking a seamless experience with expert assistance and long-term support, TaxBuddy provides a higher level of security and convenience. ClearTax may work well for DIY filers but lacks some of the in-depth features provided by TaxBuddy, such as free 365-day post-filing support and automated regulatory updates.

Q3. Where to file an income tax return?

Income tax returns can be filed directly on the official Income Tax Department e-filing portal or through trusted third-party platforms like TaxBuddy and ClearTax. Both TaxBuddy and ClearTax integrate with the government portal, ensuring that your submission is official and processed directly by the Income Tax Department. These third-party platforms provide added features like AI-assisted filing and expert support, making the process more convenient and error-free.

Q4. What is the process of filing an ITR through TaxBuddy?

Filing an ITR through TaxBuddy is simple and straightforward. Here’s how it works:

Sign up or log in to your TaxBuddy account.
Upload your Form 16, PAN, Aadhaar, and other necessary documents.
TaxBuddy’s AI system automatically pre-fills your tax forms with data from your documents.
The platform will guide you through each step, ensuring accurate entries and tax deductions.
Once all the details are entered, TaxBuddy will validate the data, check for errors, and ensure compliance with the latest regulations.
You can then submit your ITR directly through the Income Tax Department's portal, with TaxBuddy's expert support available if you need any assistance.

Q5. Is it safe to file ITR through TaxBuddy?

Yes, TaxBuddy is a highly secure platform for filing ITR. It uses end-to-end encryption to protect your sensitive data, including PAN, Aadhaar, and bank account details. The platform is compliant with the Income Tax Act, 1961 and follows all relevant data protection guidelines. With TaxBuddy, you can be confident that your personal and financial information is handled securely throughout the filing process.

Q6. What are the advantages of using TaxBuddy for tax filing?

TaxBuddy offers several key advantages over other platforms, including:

AI-driven automation that pre-fills tax forms with accurate data.
Comprehensive error validation to ensure compliance with the latest tax amendments.
365 days of post-filing support, including help with income tax notices and assessments.
Transparent pricing with no hidden fees, making it easy to understand the cost upfront.
User-friendly interface with expert assistance available at every step of the process.

Q7. How long does it take to file ITR on TaxBuddy?

Filing your ITR on TaxBuddy typically takes around 30 minutes to an hour, depending on the complexity of your tax situation. Thanks to the platform's AI-driven pre-filling and error validation features, the process is much quicker than manual filing. For users with simpler tax returns, the process can be completed in as little as 30 minutes.

Q8. How does TaxBuddy handle post-filing support?

TaxBuddy offers free post-filing support for 365 days after your tax return is filed. This support includes:

Assistance with handling income tax notices from the Income Tax Department.
Help with rectifications in case of errors or discrepancies in your filed return.
Expert guidance during assessments under Section 143(1).

This ongoing support ensures that you are not left alone after filing your return, providing peace of mind if any issues arise.

Q9. What documents do I need to file my ITR on TaxBuddy?

To file your ITR on TaxBuddy, you will typically need the following documents:

Form 16 from your employer.
PAN and Aadhaar details.
Bank account information, including details for any refunds.
Form 26AS (if applicable), which provides details on your TDS deductions.
Income details for any other sources of income, such as freelance work, rental income, or capital gains.

Q10. Is TaxBuddy better than ClearTax?

TaxBuddy is often considered a better option than ClearTax due to its comprehensive support, AI-driven accuracy, and all-inclusive pricing. TaxBuddy offers a more seamless experience with expert assistance available throughout the filing process. On the other hand, ClearTax is more DIY-focused and charges extra for post-filing support, which can add up. TaxBuddy’s all-inclusive pricing and free 365-day post-filing assistance make it the more reliable and cost-effective choice for many users.

Q11. Does TaxBuddy offer mobile filing options?

Yes, TaxBuddy offers a mobile app that allows users to file their ITR directly from their smartphones. The app provides a seamless experience, with features like guided filing, document uploads, and access to expert assistance at your fingertips. This makes it convenient for users to file their taxes anytime, anywhere.

Q12. Can TaxBuddy help with filing ITR for multiple income sources?

Yes, TaxBuddy is designed to handle complex tax returns involving multiple income sources. Whether you have salary income, freelance earnings, capital gains, or rental income, TaxBuddy can help you accurately report all sources of income, optimize your deductions, and ensure that your ITR is filed correctly, all with AI-driven assistance.

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