The Central Board of Direct Taxes (CBDT) has notified fresh guidelines for compulsory scrutiny of Income Tax Returns (ITRs) for the financial year 2026-27. The body has identified six categories of taxpayers whose returns may be selected for detailed examination by the Income Tax Department.
The guidelines were issued through a notification dated June 4, 2026. They focus on cases involving surveys, search-and-seizure operations, reassessment proceedings, tax-evasion information, recurring tax disputes, and certain trusts or institutions claiming tax benefits despite the cancellation of registrations, Financial Express reported.
Which categories are identified for compulsory scrutiny?
According to the CBDT, returns of taxpayers covered by survey operations conducted under Section 133A on or after April 1, 2024, may be selected for scrutiny. Surveys under Section 133A(2A) have been excluded.
Cases involving searches under Section 132 or requisitions under Section 132A carried out between April 1, 2024, and March 31, 2026, will also go through the mandatory check.
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The guidelines further include certain reassessment cases where notices have been issued under Section 148. Depending on the nature of the case, scrutiny may be conducted through the National Faceless Assessment Centre (NaFAC) or jurisdictional authorities.
Trusts, educational institutions, research bodies and charitable entities that continued to claim exemptions or deductions in ITR-7 despite cancellation, denial or withdrawal of registrations before March 31, 2025, will also come under scrutiny. Cases where appellate authorities restored registrations have been excluded.
Large additions, tax-evasion inputs also covered
CBDT has also directed scrutiny of taxpayers where substantial additions were made in earlier assessment years on recurring issues, and those additions have attained finality or were upheld by appellate authorities.
The threshold has been fixed at Rs. 50 lakh for taxpayers in Delhi, Mumbai, Bengaluru, Chennai, Hyderabad, Kolkata, Pune, and Ahmedabad, and Rs. 20 lakh for taxpayers in other jurisdictions, as reported by Financial Express.
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In addition, cases based on specific tax-evasion information received from law-enforcement agencies, intelligence agencies, regulatory bodies, or Income Tax Department investigation wings can be selected for compulsory scrutiny.
The CBDT clarified that mismatches relating to the Annual Information Statement (AIS), Statement of Financial Transactions (SFT), Non-Filer Monitoring System (NMS) or CPC-TDS data will not automatically trigger scrutiny. Such cases will continue to be processed through the Computer Assisted Scrutiny Selection (CASS) system unless they fall under the notified categories.
The board has directed tax officers to serve notices under Section 143(2) for compulsory scrutiny cases by June 30, 2026.
FAQs:
1. Which taxpayers can face compulsory ITR scrutiny in FY 2026-27?
Taxpayers linked to surveys, searches, reassessments, tax-evasion inputs, recurring disputes, and certain trusts can face scrutiny.
2. Do AIS or SFT mismatches automatically lead to scrutiny?
No, such cases will generally continue through the CASS system unless they fall under notified categories.
