Guideline for ITR Compulsory Selection for Complete Scrutiny

Guidelines for Compulsory Selection of Returns for Complete Scrutiny – FY 2025-26

• The Central Board of Direct Taxes (CBDT) has released its Central Action Plan (CAP) for FY 2025–26, setting the tone for India’s income tax administration. With a strong focus on litigation management, early refunds, quality scrutiny, and enhanced taxpayer services, this year’s plan aims to foster a transparent, digital-first, and compliance-friendly ecosystem.
• Central Board of Direct Taxes issued circular to the Department of Revenue, Ministry of Finance, Government of India. Date: 13th June 2025  and this circular is relevant for All Pr. CCITs / CCITs / Pr. DGITs / DGITs and purpose of this circular is to define criteria and procedures for compulsory selection of scrutiny cases.

What Is the CBDT Central Action Plan?

• CBDT Central Action Plan FY 2025–26 : The CBDT Central Action Plan is an annual blueprint to Set performance benchmarks for income tax officers, Streamline assessment and appeal procedures, Boost taxpayer-centric services, Ensure timely and efficient legal compliance, For FY 2025–26, the Central Action Plan continues last year’s themes while intensifying focus on High-quality scrutiny, Faster refund issuance, Faceless appeal finalization
• The CBDT Central Action Plan FY 2025–26 is a continuation of India’s evolving, digital-centric tax regime. With a sharper focus on transparency, faceless assessments, and faster service delivery, the Plan reflects the government’s commitment to a modern, taxpayer-friendly administration.
• Central Action Plan is supported by Income-tax Act, 1961, Section 119 – Empowers CBDT to issue directives, Union Budget 2024–25 – Focused on faceless schemes and digital reforms & Notifications and circulars available on the CBDT Official Website

• The CBDT Central Action Plan Targets in By the Numbers, i.e., 100% disposal of appeals pending >3 years, income tax Refunds within 30 days of ITR processing, Scrutiny case resolution: Targeted for completion by Q3 FY 2025–26 (except special audits) and Surveys: To be data-driven only, with prior administrative approval

• Our experts are saying about it With strict timelines in place under this year’s Central Action Plan, early filing of ITRs and timely response to notices is crucial to avoid scrutiny-related penalties and refund delays

Compulsory Scrutiny Parameters for Selection of Returns for Complete Scrutiny – FY 2025-26

Important CBDT Clarifications related to response to Section 142(1) notice

Income tax returns filed in response to Section 142(1) notice due to info from NMS, AIS, SFT, CPC-TDS, etc., will not be selected for compulsory scrutiny. These may be selected under CASS (Computer Aided Scrutiny Selection). Key Focus Areas for Compulsory Scrutiny Parameters for Selection of ITR for Complete Scrutiny for FY 2025–26

Income tax returns, related notices & income tax case handling CBDT  instructions:

• For AO/NFAC Action: Notice u/s 148 issued – whether return filed or not – to be handled via NaFAC if not a search case. If Search/Survey conducted (01.04.2021 to 31.08.2024) and return filed – issue notice u/s 143(2), transfer to Central Charges. Third-party data (non-core group) from search cases does not require transfer to Central Charges unless as per Board guidelines dated 25.04.2014.
• International Taxation & Central Circle Cases : Cases shall be selected as per these parameters with prior approval and will continue to be handled within their respective charges. NaFAC coordination not applicable for these cases.
• CBDT Instruction for Authorities : All Pr.CITs, Pr.DGITs, CITs, etc., must ensure Timely identification and approval of cases, Submission of lists to Pr.CCIT and further to DIT(Systems) by 23.06.2025 Uploading of documents by JAOs for NaFAC action
• The deadline for Service of Notice u/s 143(2) is For ITRs filed in FY 2024-25: Deadline is 30.06.2025

• How It Impacts Different Taxpayers 

  • Salaried individuals expect faster income tax refund processing and better grievance resolution.

  • Consultants & CAs Need to ensure accurate submissions and track scrutiny timelines.

  • Businesses must tighten controls over TDS compliance and real-time audits and respond swiftly to enforcement actions.

Frequently Asked Questions (FAQs)

Q1. Does this affect AY 2024–25 returns?

Ans :  Yes. Refunds and scrutiny for AY 2024–25 will follow CAP timelines and quality guidelines.

Q2. Will scrutiny cases increase?

Ans : Not necessarily in number, but the depth and quality of scrutiny will improve.

Q3. Can refund status be checked faster now?

Ans :  Yes. Use the TIN-NSDL Refund Portal for real-time updates.