India’s Income Tax Department has uncovered sales suppression worth nearly ₹408 crore in the restaurant sector following a nationwide verification drive aimed at identifying tax evasion in the food and beverage (F&B) industry. Authorities have now reached out to around 63,000 restaurants, urging them to review and update their income tax returns (ITRs) before March 31, 2026, as part of a compliance initiative.
Key Highlights
- Income Tax Department finds ₹408 crore suppressed sales; 63,000 restaurants urged to update tax returns.
- Nationwide survey across 46 cities reveals billing manipulation and large-scale under-reporting in restaurant sector.
The findings emerged after the department conducted surveys across 62 restaurants located in 46 cities spanning 22 states, including major centres such as Delhi, Mumbai, Chennai, Kolkata, Bengaluru, and Jaipur. Preliminary analysis revealed suppressed sales amounting to about ₹408 crore, indicating widespread under-reporting of income in the sector.
In an official statement, the tax authorities said, “A nationwide survey was conducted on 62 restaurants across 46 cities in 22 states. On a preliminary basis, the exercise revealed suppression of sales amounting to around ₹408 crore.”
The investigation began in November 2025, when the department detected suspicious patterns suggesting potential tax evasion in restaurant billing practices. Authorities found instances where restaurants allegedly deleted bulk bills or modified billing records to hide actual turnover and reduce tax liabilities.
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To identify discrepancies, officials analysed transactional data from nearly 1.77 lakh restaurants using AI-enabled analytics tools and compared it with the turnover reported in their tax filings. The exercise revealed “large-scale under-reporting of income,” with some recorded sales not reflected in financial statements or tax returns.
The department has launched the SAKSHAM NUDGE campaign, a voluntary compliance initiative that encourages businesses to rectify discrepancies rather than immediately face enforcement action. Under the first phase, emails and messages are being sent to identified restaurants asking them to file updated returns under Section 139(8A) of the Income Tax Act.
Experts say the move reflects a broader shift toward data-driven tax enforcement. According to tax consultant Amit Maheshwari, Partner at AKM Global, “Going forward, we expect to see many more large-scale investigations through innovative use of data analytics to widen the tax base.”
Authorities have indicated that investigations are still ongoing and the final scale of discrepancies could become clearer as the probe progresses.
