CBDT Guidelines for Compulsory Scrutiny of Income Tax Returns - FY 2025-26

The Central Board of Direct Taxes (CBDT) has issued guidelines for the compulsory selection of income tax returns for complete scrutiny during FY 2025-26. Here are the key points:

Mandatory Scrutiny Cases:

1. Survey-Based Cases: Returns will be scrutinized if a survey under Section 133A was conducted on or after April 1, 2023.

2. Search & Requisition Cases: Returns linked to searches under Section 132 or requisitions under Section 132A between April 1, 2023, and March 31, 2025, will be scrutinized.

3. ITR-7 - Exemption Registrations: ITR-7 filers claiming exemptions under Sections 12A, 12AB, or 10(23C) without valid registration or with cancelled/withdrawn registration (unless reversed on appeal) will be scrutinized.

4. Recurring Additions Trigger: Assessees with recurring additions on issues of law or fact (including Transfer Pricing) exceeding:

    - ₹50 lakh in 8 metros

    - ₹20 lakh elsewhere

will face mandatory scrutiny if additions are final or upheld on appeal.

5.  Tax-Evasion Alerts: Returns flagged with intelligence on possible tax evasion from law-enforcement or regulatory bodies will be scrutinized.

Scrutiny Timeline:

- Notices under Section 143(2) for returns filed in FY 2024-25 must be served by June 30, 2025.

Summary:

The CBDT's guidelines focus on high-risk ITRs linked to searches, exemption claims, recurring additions, and intelligence alerts. Stay compliant and be prepared for scrutiny!

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