CBDT Issues Guidelines for Compulsory Scrutiny Selection for FY 2026-27

The Central Board of Direct Taxes (CBDT) has issued guidelines prescribing the parameters and procedure for compulsory selection of income-tax returns for complete scrutiny during the Financial Year 2026-27. The guidelines have been issued under section 536(2)(c) of the Income-tax Act, 2025 and will apply to returns filed during FY 2025-26.

1. Cases Mandatorily Selected for Scrutiny

The following categories of cases shall be compulsorily selected for complete scrutiny:

1.1. Survey, Search and Requisition Cases

• Cases involving a survey under section 133A;
• Cases where search or requisition proceedings have been initiated on or after 01-04-2024; and
• Cases where notices under section 148 have been issued.

1.2. Exemption and Registration-Related Cases

Returns filed in ITR-7 shall be selected for scrutiny where an entity continues to claim exemption or deduction despite:

• Registration or approval under sections 12A or 12AB not being granted or having been cancelled/withdrawn;
• Approval under section 35(1)(ii), 35(1)(iia) or 35(1)(iii) not being granted or having been withdrawn; or
• Approval under section 10(23C)(iv), (v), (vi) or (via) not being granted or having been withdrawn.

2. Recurring Addition Cases

Returns may also be selected for scrutiny where additions made in earlier assessment years on recurring issues exceed:

• ₹50 lakh in the eight metro charges; or
• ₹20 lakh in charges other than the eight metro charges.

Such cases will qualify only where the additions:

• Have attained finality; or
• Have been upheld by appellate authorities in favour of the Revenue.

3. Cases Based on Specific Tax Evasion Information

Returns may be compulsorily selected where specific information relating to tax evasion is received from:

• Investigation wings;
• Intelligence agencies;
• Law enforcement agencies;
• Regulatory authorities; or
• Other government bodies.

4. Cases Excluded From Compulsory Scrutiny

The guidelines clarify that returns filed in response to notices issued under section 142(1) based on information available through:

• NMS Cycle;
• Annual Information Statement (AIS);
• Statement of Financial Transactions (SFT);
• CPC-TDS; or
• Information received from the Directorate of I&CI,

shall not be selected for compulsory scrutiny merely on that basis.

However, such cases may still be selected if they fall within the category involving specific information on tax evasion.

5. Time Limit for Issue of Notice Under Section 143(2)

For returns filed during FY 2025-26, the CBDT has specified that the notice under section 143(2) must be served on or before:

30 June 2026

6. Objective of the Guidelines

The guidelines seek to ensure focused scrutiny of high-risk cases involving search, survey, and reassessment proceedings, disputed exemption claims, recurring additions, and credible tax-evasion information. At the same time, they seek to reduce unnecessary scrutiny by excluding cases selected solely on the basis of information available through routine reporting systems unless supported by specific evidence of tax evasion.