CBDT Releases Guidelines for Compulsory Selection of Returns for Complete Scrutiny FY 2026-27 [Read Circular]

The Central Board of Direct Taxes (CBDT), under the Ministry of Finance, has issued a notification dated June 2026 laying down the guidelines for compulsory selection of income tax returns for complete scrutiny during the financial year 2026-27. The guidelines apply to returns filed in FY 2025-26 and specify the categories of taxpayers whose returns will be mandatorily picked for detailed examination by the Income Tax Department.

According to the guidelines, returns will be selected for compulsory scrutiny in cases involving surveys, searches, reassessment proceedings, cancellation of tax-exempt status, recurring tax additions and specific information related to tax evasion.

Key categories covered under the guidelines include:

• Cases where a survey under Section 133A of the Income-tax Act was conducted on or after April 1, 2024.
• Cases where a search under Section 132 or requisition under Section 132A was initiated on or after April 1, 2024.
• Cases in which notices under Section 148 have been issued for reassessment of income.
• Trusts, institutions and other entities whose registration or approval under provisions such as Sections 12A, 12AB or 10(23C) was cancelled, withdrawn or denied but which continue to claim tax exemptions or deductions.
• Cases involving substantial additions in earlier assessment years on recurring issues where such additions have attained finality or have been upheld in favour of the tax department.
• Cases where specific information pointing to possible tax evasion has been received from law enforcement agencies, intelligence agencies, regulatory authorities or investigation wings.

The CBDT has clarified that a return filed in response to a notice under Section 142(1) based solely on information available in the Annual Information Statement (AIS), Statement of Financial Transactions (SFT) or TDS records will not automatically be selected for compulsory scrutiny unless it falls under the category relating to specific tax evasion information.

The guidelines also provide separate procedures for cases handled by International Taxation and Central Charges authorities.

The CBDT has stated that notices under Section 143(2) for returns selected under these parameters must be issued within the prescribed time limit. For returns filed during FY 2025-26, the last date for serving such notices is June 30, 2026.

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