The Income Tax Department recently conducted a nationwide survey of 62 restaurants across 46 cities in 22 states, uncovering suppressed sales of approximately ₹408 crore on a preliminary basis.
The survey, confirmed by the Central Board of Direct Taxes (CBDT) on Monday, is part of a wider investigation that began in November 2025 into tax evasion patterns in the Indian food and beverage (F&B) sector.
The method of evasion? Using tech. Restaurants were allegedly using billing software to delete bulk invoices, selectively wiping cash transaction records for entire date ranges, sometimes up to 30 days before filing their income tax returns.
Card and UPI transactions were retained for internal control but excluded from declared turnover, leaving a digital trail that investigators could trace, according to the finance ministry.
The department used AI-enabled analytical tools to examine transactional data from approximately 1.77 lakh restaurants across the country and cross-referenced it with the turnover figures declared in their Income Tax Returns, identifying large-scale discrepancies.
The roots of this crackdown stretch back to Hyderabad. What began as a routine investigation by the IT department's Hyderabad wing in late 2024 snowballed into a national probe, with authorities analysing nearly 60 terabytes of transactional data and identifying concealed sales estimated at ₹70,000 crore since FY 2019–20. Hyderabad alone accounted for an initial finding of ₹13,317 crore in underreporting linked to deleted invoices. Over 27 per cent of surveyed restaurants are estimated to have engaged in such evasion.
But the Centre is not immediately slapping punitive action. Instead, the Department plans to deploy its SAKSHAM NUDGE campaign—a seven-stage, non-intrusive strategy that uses data analytics and behavioural insights to prompt voluntary compliance, as per the ministry.
In the first phase, emails and messages are being sent to 63,000 identified restaurants, urging them to file updated returns under Section 139(8A) of the Income Tax Act before March 31, 2026.
The broader NUDGE initiative has already generated ₹8,810 crore in additional revenue from 1.11 crore revised returns filed in the last two years, reports said.
