Income Tax Probe Exposes Massive Rs 70,000 Crore Tax Evasion in Restaurant Industry
An extensive investigation by the Income Tax Department, which began with biryani restaurant chains in Hyderabad, has uncovered a staggering nationwide tax evasion racket within the food and beverages industry. Officials have revealed that suppressed sales could potentially run into tens of thousands of crores across India, shaking the foundations of tax compliance in the sector.
Rs 70,000 Crore in Suppressed Sales Flagged Through Data Analysis
By meticulously analyzing a colossal 60 terabytes of transactional data extracted from a widely used billing software platform, investigators have detected sales suppression amounting to at least Rs 70,000 crore since the 2019–20 financial year. This software reportedly controls nearly 10% of the restaurant billing market, indicating a significant penetration of the fraudulent mechanism.
Regional Breakdown: Telangana and Andhra Pradesh Show Rs 5,141 Crore Suppression
In Andhra Pradesh and Telangana alone, authorities have identified suppressed turnover worth ₹5,141 crore. Physical and digital checks of just 40 sample restaurants in these two states revealed suppression of nearly ₹400 crore, highlighting the pervasive nature of the evasion tactics.
Bulk Deletions Worth Rs 13,317 Crore Detected in Backend Operations
Investigators found that out of the Rs 70,000 crore flagged, post-billing deletions totalled Rs 13,317 crore. These deletions were traced directly to backend operations within the billing software, raising serious concerns about systemic misuse and intentional design flaws.
'Delete' Button Under Scanner for Allowing Widespread Fraud
A bulk deletion function within the Point of Sale (POS) software allowed restaurants to erase bills for selected date ranges—sometimes up to 30 days at a time. Officials noted that there appeared to be no clear restriction on how frequently this feature could be used, facilitating repeated and large-scale evasion.
Post-Generation Bill Modifications Flagged as Another Red Flag
Another alarming practice uncovered was the modification of bills after their initial generation. In one cited case, an invoice of Rs 2,784 was allegedly altered to a mere Rs 27. Investigators stated that suspicious edits often involved steep reductions and were made days or even months later, suggesting premeditated fraud.
Karnataka Tops Deletion List Among States
Among states, Karnataka recorded the highest deletions at around Rs 2,000 crore, followed by Telangana with Rs 1,500 crore and Tamil Nadu with Rs 1,200 crore. The top five states flagged in the investigation were Tamil Nadu, Karnataka, Telangana, Maharashtra, and Gujarat, indicating a widespread geographic spread of the evasion.
AI and Forensic Technology Power Nationwide Crackdown
Investigators leveraged high-capacity forensic systems and advanced AI tools, including Generative AI, to analyze 1.77 lakh restaurant IDs across six financial years. Officials believe that the current findings may represent only the tip of the iceberg, as multiple billing platforms operate across the country, potentially harboring similar vulnerabilities.
This revelation underscores critical gaps in digital billing systems and calls for stringent regulatory oversight to prevent such large-scale financial fraud in the future.
