Why Are Some Websites Providing Free E-Filing of Income Tax Return in India?

Q: Are the free e-filing platforms secure for sharing personal information like PAN and bank details?

Yes, trusted platforms such as TaxBuddy use 128-bit SSL encryption to secure sensitive information. They comply with data privacy laws to ensure that personal data, including PAN and bank details, remains protected during the filing process.

Farheen Mukadam
Jul 9
8 min read

E-filing of Income Tax Returns (ITR) has become a routine compliance task for many taxpayers in India. With the government's push for digitalization and increasing ease of access to services, several websites offer free e-filing services. But why do some platforms offer this service for free? The core reasons stem from strategic market approaches, governmental initiatives, and the role of technology in reducing operational costs. Let us explore the factors that make free e-filing of ITR a reality for Indian taxpayers, while also discussing the implications for both users and service providers.

Some platforms provide free e-filing of income tax returns to make tax filing more accessible, streamline compliance, and build user trust. These platforms benefit from user acquisition, data insights, and cross-selling paid services after the basic return is filed. Additionally, AI-driven technology has made it cost-effective for businesses to offer free services, contributing to improved tax compliance.

Government Push for Digital Compliance and Ease of Filing
Competitive Market and User Acquisition by Private Platforms
Simplification and Automation Through Technology
Regulatory and Legal Framework Encouraging Transparency
Addressing Specific Long-Tail Queries Related to Bank Account and Filing
Conclusion
FAQs

Government Push for Digital Compliance and Ease of Filing

The Indian government has made significant strides in enhancing the tax filing experience by embracing digital tools and technology. The Income Tax Department’s official e-filing portal is at the heart of this transformation, offering free access to taxpayers. The aim is to make the process as simple and efficient as possible for all citizens, regardless of their income level or geographic location. By providing an easy-to-use platform, the government has ensured that filing is accessible to every taxpayer in India, removing the financial barriers that could otherwise deter individuals from fulfilling their tax obligations.

Several initiatives have been rolled out to simplify the filing process:

Pre-filled Forms: A major innovation has been the integration of pre-filled tax return forms, which automatically import data from sources such as PAN, Aadhaar, and Form 26AS. This minimizes the possibility of errors and greatly reduces the time required to file, making the process much more user-friendly.
E-verification Options: To ensure a secure and seamless filing experience, the government offers multiple e-verification methods, including Aadhaar OTP, bank-based verification, and electronic verification code (EVC) via net banking. This allows taxpayers to file returns and verify them without physically visiting any office, thus streamlining the entire process.
Extended Filing Deadlines: The government has also introduced flexibility in filing deadlines. For instance, the filing date for FY 2024-25 has been extended to 15th September 2025. This extension helps taxpayers who may face difficulties in meeting the original deadlines and encourages timely compliance.

These combined efforts aim to make filing Income Tax Returns more accessible, efficient, and free from the burden of costs associated with manual filing. By providing free filing options through its e-portal, the government ensures that no taxpayer is excluded due to financial constraints, further promoting a culture of compliance.

Competitive Market and User Acquisition by Private Platforms

While the government provides a robust and free platform for tax filing, many private companies, including TaxBuddy, have seized the opportunity to offer free e-filing services as part of their business strategy. These platforms provide basic e-filing services without charge to attract a large user base. By doing so, they not only help taxpayers but also position themselves as trusted platforms within a competitive marketplace.

The reasons behind this strategy are multifaceted:

User Base Growth: Offering free services, particularly for basic tax returns like those of salaried individuals with standard deductions, allows platforms to onboard a larger number of users. Once these users register and experience the simplicity of the filing process, they are more likely to return for additional services, such as advanced tax planning, expert-assisted filing, or audit assistance.
Cross-Selling Paid Services: Once the user has submitted their basic return, platforms can upsell premium services such as expert consultations, investment planning, or advanced filing for complex tax returns (e.g., for self-employed individuals or those with multiple income sources). This cross-selling approach allows platforms to profit from offering free services in the beginning stages of the customer journey.
Brand Building and Trust: Offering free e-filing helps private platforms build trust and brand visibility among taxpayers. As more individuals use these platforms for free, the platform gains recognition as a reliable service provider, encouraging users to consider their paid options later.
Data Insights: These platforms benefit from aggregated anonymized data that can be used to improve AI-powered tax solutions. By analyzing data, platforms like TaxBuddy can refine their algorithms, providing even better recommendations and services for users, which drives further customer satisfaction and business growth.

Simplification and Automation Through Technology

The emergence of AI-driven technology has had a profound impact on the tax filing process, significantly lowering the cost of offering basic services and increasing their availability to taxpayers. Many free e-filing platforms, including TaxBuddy, leverage technology to reduce human intervention and automate key aspects of the tax filing process, making it easier and more efficient.

Here are some key technological advances that have contributed to the simplification of e-filing:

AI-Powered Data Extraction: Platforms use artificial intelligence to automatically extract information from Form 16, Form 26AS, and other financial documents. This eliminates manual data entry errors, reduces the risk of mistakes, and speeds up the process of preparing the tax return.
Automated Tax Calculation: AI-powered systems can automatically calculate tax liabilities based on the data provided. By accurately applying the correct deductions, exemptions, and slabs, these platforms ensure that the taxpayer files an accurate return, even if they are not familiar with the complexities of tax laws.
Reduced Operational Costs: The use of AI not only improves accuracy but also reduces the operational costs of tax filing. With automation handling basic tasks, platforms can offer free filing services for simple returns without incurring high expenses. This is one of the primary reasons why many platforms, including TaxBuddy, are able to offer free e-filing for simpler tax returns while charging for more complex services.
User-Friendly Interface: Many AI-powered platforms provide users with an intuitive interface that guides them through each step of the filing process. This ensures that even those with limited knowledge of taxes can file their returns correctly, with minimal effort.

Regulatory and Legal Framework Encouraging Transparency

India's evolving tax regulations, bolstered by changes introduced in Budget 2024 and 2025, have made the tax filing process more transparent, secure, and user-friendly. Some of the key reforms that have helped encourage free e-filing are:

Aadhaar-PAN Linkage: The mandatory linkage of Aadhaar with PAN has strengthened the identity verification process, ensuring the integrity of the data provided by taxpayers. This reduces fraudulent filings and helps streamline the filing process for taxpayers.
Increased Time Limits for Filing Updated Returns: Under Budget 2025, taxpayers now have an extended window to file updated returns for previous years, with penalties applied to encourage voluntary compliance. This initiative ensures that taxpayers can file revised returns within a period of up to 4 years, further facilitating an easy filing experience for all individuals.
Greater Focus on Data Integrity: The government’s focus on digital security has made platforms more reliable for e-filing, as stringent data privacy measures are in place. Platforms like TaxBuddy ensure that users’ personal and financial data is securely encrypted, meeting the highest standards of compliance and security.

These legal and regulatory reforms have simplified the e-filing process, helping increase taxpayer confidence and encouraging platforms to offer free filing services, which ultimately benefits taxpayers by making the process accessible and cost-effective.

Addressing Specific Queries Related to Bank Account and Filing

This section aims to address common long-tail queries that often arise when taxpayers are considering e-filing options:

Is a bank account mandatory for ITR filing? Yes, providing a bank account number is mandatory for receiving tax refunds and for verification purposes. Most free e-filing websites, including TaxBuddy, guide users on how to correctly input these details during the filing process.
How do free platforms ensure the security of personal and bank data? Reputable platforms, such as TaxBuddy, use 128-bit SSL encryption and comply with data privacy laws to safeguard personal information. This ensures that sensitive data like PAN, Aadhaar, and bank details remain secure.
Can I file ITR for free if I have multiple income sources? Basic returns that include salary and one house property can typically be filed for free. However, if you have more complex income sources, such as business income, capital gains, or foreign income, you may need to opt for a paid service.
What about late filing or revised returns? Free platforms typically guide users on how to file updated or belated returns. Budget 2025 has provided relief for taxpayers with the ability to file updated returns up to 4 years with penalties, making it easier for taxpayers to comply with filing requirements.

Conclusion

Offering free e-filing services helps platforms like TaxBuddy attract a large user base and contribute to the government's push for digital compliance. This model benefits both taxpayers and platforms by simplifying the tax filing process and making it accessible to all, while ensuring accuracy and compliance with the latest amendments. For anyone looking for assistance in tax filing, it is highly recommended to download theTaxBuddy mobile app for a simplified, secure, and hassle-free experience.

FAQs

Q1. What are the key reasons why some websites offer free e-filing of income tax returns in India? Free e-filing services are often offered by platforms to attract users, build trust, and gain data insights. Additionally, automation and AI have reduced operational costs, making it easier for companies to provide basic filing services at no charge.

Q2. Are the free e-filing platforms secure for sharing personal information like PAN and bank details? Yes, trusted platforms such as TaxBuddy use 128-bit SSL encryption to secure sensitive information. They comply with data privacy laws to ensure that personal data, including PAN and bank details, remains protected during the filing process.

Q3. Can I file my income tax return for free if I have multiple income sources? Basic returns, such as those for salaried individuals with standard deductions, can typically be filed for free. However, if your income includes more complex sources like capital gains or business income, you may need to use paid services.

Q4. What is the role of AI in offering free e-filing services? AI helps automate data extraction, tax calculation, and form selection, reducing the need for manual input and ensuring accuracy. This automation allows platforms to offer free basic filing services while maintaining compliance.

Q5. Does the government charge any fees for e-filing through the official Income Tax Portal? No, the Income Tax Department's official e-filing portal provides free access to taxpayers, offering secure and efficient filing options without any charges.

Q6. Are free e-filing platforms only for simple tax returns? Yes, free e-filing services are typically intended for simple returns, such as those of salaried individuals with standard deductions. More complex filings, such as those involving business income or foreign income, often require paid plans.

Q7. How does offering free e-filing benefit private platforms like TaxBuddy? Offering free e-filing helps private platforms attract a larger user base, build brand trust, and gather data for enhancing AI-driven solutions. Once users experience the platform, they are more likely to purchase advanced services.

Q8. How do private platforms like TaxBuddy handle complex ITR filings if they offer free services for basic filings? For complex filings, platforms like TaxBuddy offer expert-assisted services that come with additional features like consultations, audit support, and advanced filing options, which are not covered under the free filing plan.

Q9. What are the tax filing deadlines for FY 2024-25, and how do free platforms accommodate them? For FY 2024-25, the deadline for filing ITR has been extended to 15th September 2025. Free platforms ensure that users can file returns within the stipulated deadlines and offer support for timely e-filing.

Q10. Can I file an ITR for multiple years using free platforms? Yes, many free platforms allow you to file belated returns or even revised returns. Platforms like TaxBuddy guide users on how to file for multiple years, including updated returns, based on the latest tax laws.

Q11. Do free e-filing platforms charge any hidden fees for accessing the filing status or tax refund? Reputable platforms, including TaxBuddy, do not charge hidden fees for checking filing status or receiving tax refunds. Refunds are processed based on the details submitted and are sent directly to the taxpayer’s bank account.

Q12. Are free e-filing platforms accessible to taxpayers who are not tech-savvy? Yes, platforms like TaxBuddy provide an easy-to-use interface with clear instructions, ensuring that even taxpayers with limited technical knowledge can file their returns accurately and securely without assistance.