Income Tax Department Issues ITR Scrutiny Guidelines for FY 2026‑27

The Income Tax Department has released new scrutiny guidelines for the financial year 2026‑27 and classifications of taxpayers whose returns will be subject to scrutiny. These are for the returns for the year 2025‑26, and notices under Section 143(2) for which notifications were made need to be made by June 30, 2026.

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It is designed to improve compliance and to make tax administration transparent. Subsequent to April 1, 2024, the guidelines will be mandatory in the case where surveys have been carried out under Section 133A and not under 133A(2A) and returns that are searched under Section 132 or requisitions under Section 132A will be automatically picked.

Taxpayers who are served with notices under Section 148 for reassessment will also be subject to compulsory scrutiny. Exemptions or deductions made while being cancelled or not registered will also be scrutinised. In addition, cases of recurring additions to the previous year will be considered. Tax evasive returns will also be included in the compulsory category.

Cases will be selected by the Directorate of Income Tax (Systems) with approval from DGIT. Consolidated lists will be prepared by Principal CCITs and DGsITs to ensure uniformity. Cases outside Central Charges must be transferred within 15 days of the notice being served and will be transferred across jurisdictions.

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Tax professionals say that the guidelines are similar to those issued a year ago, with a focus on risk‑based factors. According to Mihir Tanna of S.K. Patodia LLP, the focus is to verify taxpayer-furnished information against official documentation and so people and businesses need to make sure they are filing in the same way as a business with Form 26AS, AIS and other documents.

The guidelines do not provide any radical changes but they do reinforce the government’s policy of addressing tax evasion and improving compliance. The researchers believe the compulsory scrutiny of the high-risk categories will improve accountability and deter fraud.

Taxpayers who fall into survey, search, reassessment or flagged categories should prepare for compulsory scrutiny in FY 2026‑27. With notices due by June 30, 2026, proper documentation and reconciliation is needed to avoid disputes and keep people’s compliance smooth.