The IT department on Monday confirmed businessline’s exclusive report published a day before and said it had analysed transactional data of around 1.77 lakh restaurants using AI-enabled analytical tools. The figures were compared with turnover reported in their Income Tax Returns (ITRs). The analysis pointed to significant mismatches, indicating that several establishments had suppressed actual sales in their financial accounts and tax filings, the IT Department said in a statement.
In many cases, officials found that bulk bills were deleted or modified to conceal the real value of transactions, while certain sales were excluded altogether from reported turnover. “On 8 March 2026, 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. Investigations in this regard are underway,” the statement read.
The crackdown follows a broader probe initiated after routine inspections at restaurants in Hyderabad last month uncovered concealed sales and triggered a deeper examination of the sector. According to officials, the department subsequently analysed nearly 60 terabytes of transactional data spanning seven years from 2019, which helped identify patterns of under-billing and data manipulation.
Sources said investigators discovered that some restaurants used point-of-sale (PoS) billing software systems that allowed operators to first record all transactions and later delete invoices or alter bill values before filing GST and income tax returns. In certain systems, bulk deletion of transaction data could be carried out within seconds, enabling businesses to understate their revenue.
One of the software platforms under scrutiny is widely used across the restaurant industry to manage orders, billing, inventory and GST records while storing data on central servers. Officials said the manipulation of such digital billing systems was a common modus operandi adopted by several establishments.
Initial analysis conducted earlier in Hyderabad alone had reportedly identified under-billing of about ₹13,317 crore from deleted invoices. Based on broader assessments, tax authorities suspect that over 27 per cent of restaurants may be involved in similar practices.
Meanwhile, the department has emphasised voluntary compliance and launched the “SAKSHAM NUDGE” campaign to encourage taxpayers to correct discrepancies. As part of the initiative, around 63,000 restaurants identified through data analytics will receive emails and messages asking them to update their tax returns before March 31, 2026.
Taxpayers have been advised to file updated returns under Section 139(8A) of the Income Tax Act to rectify omissions or under-reporting of income.
Officials said the exercise reflects the department’s increasing reliance on AI, data analytics and digital forensics to detect tax evasion and improve compliance in sectors with large cash transactions.
Published on March 10, 2026