DEV Community: taxgarden

# Automate CBDT Scrutiny Risk Scoring Against AIS Data in Python

taxgarden — Mon, 17 Aug 2026 10:07:44 +0000

CBDT issues compulsory scrutiny guidelines each year specifying which ITRs get flagged for mandatory audit. For FY 2026-27, the criteria are broader than previous years. If you are building compliance tools or processing ITR data, you need these rules encoded.

The FY 2026-27 Compulsory Scrutiny Criteria
CBDT mandates scrutiny when any of the following are present:

AIR/SFT mismatch: Cash deposits above Rs 10 lakh in savings accounts not matching declared income
Capital gains underreporting: LTCG/STCG in AIS not matching Schedule CG in ITR
International transactions: Transfer pricing cases with turnover above Rs 50 crore
Treaty claims: Non-residents claiming DTAA exemptions above threshold
Non-filers with high-value transactions: Persons with SFT-reported transactions who did not file an ITR
Returns selected by system-based risk parameters: INSIGHT portal flags based on behavioural analytics
Building a Risk Scorer in Python

```python from dataclasses import dataclass from typing import Optional

@dataclass class AISData:

cash_deposits
float
reported_income
float
stcg_in_ais
float
stcg_in_itr
float
ltcg_in_ais
float
ltcg_in_itr
float
has_international_txn
bool
intl_txn_turnover
float
is_non_resident
bool
filed_itr
bool
sft_high_value
bool
def scrutiny_risk_score(ais: AISData) -> dict: flags = []

if ais.cash_deposits > 1_000_000 and ais.cash_deposits > ais.reported_income * 0.3: flags.append("CASH_DEPOSIT_MISMATCH")

if abs(ais.stcg_in_ais - ais.stcg_in_itr) > 10_000: flags.append("STCG_MISMATCH")

if abs(ais.ltcg_in_ais - ais.ltcg_in_itr) > 10_000: flags.append("LTCG_MISMATCH")

if ais.has_international_txn and ais.intl_txn_turnover > 50_000_000: flags.append("TRANSFER_PRICING_RISK")

if ais.sft_high_value and not ais.filed_itr: flags.append("NON_FILER_HIGH_VALUE")

return { "risk_level": "HIGH" if len(flags) >= 2 else "MEDIUM" if flags else "LOW", "flags": flags, "recommend_review": bool(flags) } ```

Integrating with AIS JSON Export
The AIS is downloadable from the income tax portal as a JSON. Parse partB.generalInfo for SFT transactions and partB.capitalGains for AIS capital gains data. Cross-reference against the ITR XML export (ITR-2 / ITR-3 Schedule CG).

Why This Matters for Compliance Platforms
If you are building ITR validation or pre-filing checks, encoding the CBDT scrutiny criteria as a rule engine flags high-risk returns before submission. The taxpayer can either correct the return or prepare a paper trail in advance.

Full CBDT scrutiny guidelines FY 2026-27 with case examples: CBDT compulsory scrutiny criteria FY 2026-27

# Automating GST Inverted Duty Refund Calculations: Rule 89(5) in Code

taxgarden — Wed, 12 Aug 2026 12:16:51 +0000

If you are building a GST compliance module for an ERP, accounting SaaS, or tax automation tool, the inverted duty structure (IDS) refund calculation is a formula you will encounter. It is prescribed in Rule 89(5) of the CGST Rules and amended by Notification 14/2022-Central Tax dated 5 July 2022.

Here is the formula, translated from legal language to something you can actually implement:

The Rule 89(5) Formula
Maximum Refund = ( (Turnover_of_Inverted_Rated_Supply * Net_ITC) / Adjusted_Total_Turnover ) - Tax_Payable_on_Inverted_Rated_Supply

Where:

Turnover_of_Inverted_Rated_Supply = value of supplies where input rate > output rate
Net_ITC = ITC availed on inputs (goods only, NOT input services, NOT capital goods)
Adjusted_Total_Turnover = total turnover minus zero-rated supply turnover, exempt supply turnover, and the value of inverted supplies already counted
Tax_Payable_on_Inverted_Rated_Supply = the output tax liability on inverted supplies
Implementation Notes

Exclude input services
The Supreme Court ruling in VKC Footsteps India v. Union of India (2021) confirmed that input services are NOT included in Net_ITC for this formula. Your data model must track ITC by supply type (inputs/goods vs input services vs capital goods).
Get Adjusted_Total_Turnover right
This is where most implementations fail. It must exclude:

Zero-rated supplies (exports, SEZ supplies)
Exempt supplies
Turnover from supplies covered under Section 10 (composition scheme)
Value of supplies already used as the numerator
Some implementations double-count by including inverted supplies in both the numerator and the denominator.

Tax period granularity
The refund is claimed period-by-period (monthly or quarterly). Your calculation engine needs to run this formula for each GSTIN for each tax period separately.
The 90% provisional refund (October 2025)
Since GST Instruction 6/2025 (effective 1 October 2025), the system now grants 90% provisional refunds to low-risk taxpayers before full adjudication. If you are integrating with GSTN APIs, watch for the risk-score flags that determine provisional eligibility.

Industries to Flag in Your Product
The IDS problem is concentrated in: pharma, footwear, textiles, EVs, corrugated boxes, and certain plastic products. If your SaaS serves these sectors, auto-flag potential IDS situations when input GST rate > output GST rate.

For excluded goods (edible oils, Chapter 15; coal, Chapter 27), suppress the refund calculation and show a clear "not eligible" status.

Filing Flow
The human steps after your calculation: Form RFD-01 on the GST portal, ARN generation, provisional refund order, scrutiny and final order. Your tool can pre-populate the RFD-01 fields from the computation.

For the full compliance context including legal framework and common rejection reasons, reference the GST inverted duty structure refund formula guide.

Building something in this space? Drop a comment below.

7 Common ITR Filing Mistakes That Could Cost You Your Tax Refund

taxgarden — Thu, 30 Jul 2026 07:31:36 +0000

Every year, thousands of taxpayers lose refunds or receive notices from the Income Tax Department—not because they intentionally did something wrong, but because of simple filing mistakes. The good news? Most of these errors are completely avoidable.

If you're filing your Income Tax Return (ITR) this year, make sure you don't make these seven common mistakes.

Choosing the Wrong ITR Form

Selecting the wrong ITR form is one of the most common mistakes.

For example:

ITR-1 is generally for individuals with salary and certain other simple income.
ITR-2 is used when you have capital gains, multiple house properties, or foreign assets.
ITR-3 is meant for business or professional income.

Using the wrong form may result in your return being treated as defective, requiring you to file a corrected return.

Tip: Understand your sources of income before selecting an ITR form.

Not Matching Form 26AS and AIS

Many taxpayers file their return using only Form 16.

However, banks, brokers, employers, and other institutions report your income directly to the Income Tax Department through Form 26AS and the Annual Information Statement (AIS).

If your return doesn't match these records, you may receive a notice.

Always verify:

Salary
Bank interest
Dividend income
Capital gains
TDS deducted

Missing Eligible Deductions

People often forget deductions that could reduce their tax liability.

Common deductions include:

Section 80C
Section 80D
NPS contributions
Home loan interest
Donations under Section 80G

Review all available deductions before filing.

Not Reporting All Sources of Income

Some taxpayers report only salary income and forget about:

Savings account interest
Fixed Deposit interest
Dividend income
Rental income
Freelancing income
Capital gains

Even if tax has already been deducted, the income still needs to be reported.

Entering Incorrect Bank Account Details

Your refund is credited directly to your bank account.

If your account number or IFSC code is incorrect—or if the account isn't pre-validated—your refund may be delayed.

Double-check your banking details before submitting your return.

Waiting Until the Last Minute

Last-minute filing often leads to:

Missing documents
Incorrect information
Technical issues on the portal
Rushed decisions

Filing early gives you enough time to verify all information and correct any mistakes.

Forgetting to E-Verify Your Return

Submitting your ITR isn't the final step.

Your return must be e-verified within the prescribed time limit using:

Aadhaar OTP
Net Banking
Bank Account EVC
Digital Signature (where applicable)

Without e-verification, your return may be treated as not filed.

Final Thoughts

A few extra minutes spent reviewing your return can save you weeks of follow-up and help you receive your refund without unnecessary delays.

Before clicking "Submit," make sure you've:

Selected the correct ITR form
Verified Form 26AS and AIS
Claimed all eligible deductions
Reported every source of income
Checked your bank details
Filed before the deadline
Completed e-verification

Filing your ITR accurately isn't just about complying with tax laws—it's about ensuring you pay the right amount of tax and receive any refund you're entitled to.

Have you ever made one of these ITR filing mistakes? Share your experience in the comments—it might help someone else avoid the same issue

TDS on Tech Vendor Payments: What Indian Startups Need to Know in 2026

taxgarden — Wed, 08 Jul 2026 07:15:42 +0000

If your startup or tech company pays vendors, contractors, or cloud providers above threshold amounts, TDS obligations apply under the Income Tax Act.
Key TDS sections for tech businesses:

Section 194C: TDS at 1% (individual/HUF) or 2% (company) on contractor payments above Rs 30,000 per transaction or Rs 1 lakh per year
Section 194J: TDS at 10% on professional fees (software development, consulting, legal) above Rs 30,000
Section 194-O: TDS at 1% on e-commerce operator payments to sellers above Rs 5 lakh
Section 195: TDS on payments to non-resident foreign vendors (AWS, Google Cloud, Stripe) , rate depends on DTAA
Filing deadlines:

Deposit TDS by 7th of the following month
File TDS returns quarterly (Form 24Q / 26Q) by 31st of the month after quarter end
Missing TDS deposits attracts interest at 1.5% per month. Late TDS returns attract Rs 200/day penalty.

Tax Garden (https://taxgarden.in) handles TDS computation, deposit, and quarterly return filing for startups and MSMEs in Hyderabad.

How We Automated Recurring Tax Compliance Workflows Using Technology

taxgarden — Tue, 23 Jun 2026 12:20:48 +0000

Indian tax compliance is a recurring-deadline problem: GST returns monthly, TDS quarterly, ROC annually, each with its own data shape and portal. The manual version is a person re-keying the same ledger data into different forms and hoping nothing drifts.

The interesting engineering problem is reconciliation. GSTR-1 (what you reported as sales) has to agree with GSTR-3B (what you paid against) and with GSTR-2B (what your vendors reported). Modeling these as data pipelines with validation gates, instead of as forms a human fills, is where automation actually moves the needle: classify each transaction once, then let agents map it into every downstream return and flag mismatches before filing rather than after a notice.

We wrote up how the agent layer is structured here: AI-driven compliance platform.

Tech angle on automating ITR data prep + 26AS/AIS reconciliation.

taxgarden — Tue, 23 Jun 2026 12:19:02 +0000

The slow part of filing an income tax return is not the form, it is making your numbers agree with the tax department's numbers. Form 26AS and the Annual Information Statement (AIS) are effectively the government's view of your income and TDS. If your return disagrees, you get a notice.

So the sane data model treats 26AS/AIS as a source of truth to diff against, not as a reference to glance at. Pull both, normalize each line (deductor, section, amount, period), and reconcile against the taxpayer's own records before a single field of the ITR is populated. Mismatches become a worklist; everything that ties out flows straight through.

Treating filing as a diff-and-resolve pipeline is what makes it repeatable across thousands of returns. The form-selection and deadline context is here: ITR filing guide.