CBDT Issues Complete Scrutiny Selection Guidelines for FY 2026-27

The Central Board of Direct Taxes (CBDT) has issued guidelines for compulsory selection of Income Tax Returns for Complete Scrutiny during Financial Year 2026-27. These guidelines are relevant for taxpayers, businesses, professionals, trusts, and entities whose returns may fall under specified risk-based categories.

Source of the Guidelines

As per CBDT Guidelines F.No.225/56/2026/ITA-II dated 4 June 2026, the compulsory scrutiny selection procedure has been prescribed for returns filed during Financial Year 2025-26.

The guidelines have been issued in relation to the Income-tax Act, 1961 and also refer to Section 536(2)(c) of the Income-tax Act, 2025 for transitional purposes.

Key Cases Covered for Complete Scrutiny

The CBDT has prescribed specific categories where returns may be compulsorily selected for complete scrutiny. These include:

1. Survey Cases

Cases where a survey under Section 133A of the Income-tax Act, 1961 has been conducted on or after 1 April 2024 may be selected for complete scrutiny, except certain excluded survey cases.

1. Search and Requisition Cases

Cases involving search under Section 132 or requisition under Section 132A on or after 1 April 2024 may be selected for compulsory scrutiny.

For searches or requisitions made on or after 1 September 2024, selection may be linked with the assessment year covered under Section 158BA(6).

1. Reassessment Cases

Cases where notice under Section 148 has been issued may also fall under complete scrutiny, especially where returns have been filed in response to such notice.

1. Exemption or Deduction Claims Without Valid Registration

Entities claiming exemption or deduction in ITR-7 despite non-grant, cancellation, or withdrawal of registration or approval under provisions such as Sections 12A, 12AB, 35(1)(ii), 35(1)(iia), 35(1)(iii), and 10(23C) may be selected.

However, cases where cancellation or withdrawal has been reversed or set aside in appeal are not to be selected under this parameter.

1. Recurring Additions in Earlier Years

Cases involving recurring additions on issues of fact or law may be selected where earlier additions exceed:

• Rs. 50 lakh in metro charges such as Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, Mumbai, and Pune

• Rs. 20 lakh in other charges

This applies where the addition has become final or has been upheld in favour of the Revenue by appellate authorities.

1. Specific Information on Tax Evasion

Cases may be selected where specific information indicating tax evasion is received from law enforcement agencies, investigation wings, intelligence agencies, regulatory authorities, or similar sources.

Important Deadline

As per the CBDT guidelines, notice under Section 143(2) for returns filed during FY 2025-26 must be served by 30 June 2026.

What Taxpayers Should Do

Taxpayers should:

• Maintain proper books of account and supporting documents

• Reconcile income reported in ITR with AIS, Form 26AS, TDS records, GST returns, and financial statements

• Keep evidence for deductions, exemptions, expenses, loans, investments, and high-value transactions

• Respond to notices within the prescribed timeline

• Maintain proper records of all submissions made on the Income Tax portal

Conclusion

CBDT’s FY 2026-27 scrutiny guidelines show a focused approach towards high-risk cases involving search, survey, reassessment, exemption claims, recurring disputes, and credible tax-evasion information. Taxpayers should ensure accurate reporting and proper documentation to handle scrutiny proceedings effectively.

For expert guidance on this topic, contact your tax professional today.