The Income Tax Department has detected under-reporting of sales worth ₹408 crore after conducting a nationwide survey of restaurants as part of a tax evasion investigation
New Delhi: The Income Tax Department has uncovered suppressed sales worth around ₹408 crore during a nationwide survey of restaurants conducted across multiple states, the Central Board of Direct Taxes (CBDT) said.
Nationwide survey across 46 cities
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According to the CBDT, officials conducted surveys at 62 restaurant premises across 46 cities in 22 states on Sunday. The action was part of the NUDGE (Non-Intrusive Usage of Data to Guide and Enable) campaign, which focuses on using data analytics to identify discrepancies in tax reporting.
Preliminary findings from the survey revealed that several restaurants had under-reported their sales, amounting to about ₹408 crore.
Cities where the surveys were conducted include Delhi, Mumbai, Chennai, Kolkata, Bengaluru, Ahmedabad, Kochi, Coimbatore, Madurai, Gurugram, Guwahati, Chandigarh, Ludhiana, Patna, Jaipur, Indore, Raipur and Bhopal, among others.
63,000 restaurants asked to update tax returns
Following the findings, the tax department has started sending emails and messages to around 63,000 restaurants asking them to review and update their income tax returns (ITRs) before March 31 if there are discrepancies.
Officials said the step is intended to encourage voluntary compliance without immediate enforcement action.
Probe began with food and beverage sector investigation
The investigation into the restaurant sector began in November 2025, when authorities started analysing financial and transactional data related to the food and beverage industry.
During the probe, officials discovered that some restaurants were allegedly deleting bulk bills or modifying billing data in order to suppress their actual sales figures.
AI tools used to detect discrepancies
The CBDT said advanced analytics and AI-based tools were used to analyse transactional data from about 1.77 lakh restaurants across the country.
The data was compared with the turnover figures reported in tax filings. The analysis revealed large-scale under-reporting of income in several cases.
In some instances, recorded sales were not fully reflected in financial accounts or tax returns, while certain transactions were completely excluded from reported revenue.
Billing software manipulation under scanner
Officials said the probe gained momentum after the Income Tax Department’s investigation wing in Hyderabad surveyed a company that develops restaurant billing software.
During the survey, authorities found indications that some restaurants and hotels were allegedly manipulating billing software systems to reduce their reported income and evade taxes.
Investigation continues
The CBDT said further investigation into the findings is ongoing. The department is expected to scrutinise financial records and digital transaction data of the identified businesses to determine the exact extent of tax evasion.
Officials added that the focus of the operation is to improve tax compliance in the restaurant sector and ensure accurate reporting of business income.
Published: 10 Mar 2026, 10:11 am IST
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