A significant tax scam in the Indian restaurant sector has been uncovered, revealing hidden turnovers amounting to approximately 70,000 crores since 2019-20, as disclosed by the Income Tax Department's investigation.
A major tax scam linked to the restaurant sector in India has come to light, with investigations by the Income Tax Department indicating that around 70,000 crores worth of turnover has been concealed from 2019-20 to now. This revelation originated from routine inspections of certain restaurants in Hyderabad last November, which prompted a deeper investigation into the fiscal activities of the sector.
The Income Tax Department examined nearly 60 terabytes of transactional data across six financial years, from 2019-20 to 2025-26, under Section 133A of the Income Tax Act. The investigation revealed that over one lakh restaurants across the country use the implicated billing software platform, which covers approximately 10 percent of India's restaurant market. A backend analysis found a total recorded billing of about 2.43 lakh crores, out of which 13,317 crores worth of entries were marked as "post-billing deletions,” indicating planned manipulations of sales figures.
The investigation has employed digital forensic methods along with artificial intelligence. Gaining backend access from the software provider's center in Ahmedabad, the Income Tax Department's digital lab in Hyderabad is advancing its forensic examinations to further uncover malpractices within the restaurant industry. This case highlights the significant tax compliance challenges faced in the sector and the potential ramifications for revenue collection in India.
