Massive Tax Evasion Uncovered in Restaurant Industry's 408 Crore Sales Underreporting

The Income Tax Department has discovered underreporting of Rs 408 crore in sales following a nationwide survey of restaurants accused of tax evasion. The CBDT's NUDGE campaign led to a probe into 62 restaurants across 46 cities, uncovering manipulation of billing software to suppress actual sales.

The Income Tax Department has uncovered extensive sales underreporting among restaurants, amounting to Rs 408 crore. A comprehensive survey under the CBDT's NUDGE campaign targeted 62 establishments across 46 cities, identifying major instances of tax evasion.

The department is dispatching emails and messages to 63,000 restaurant outlets, urging them to amend their income tax returns by March 31. This move follows the discovery of suppressed sales during an advanced data analytics exercise using AI tools, which cross-referenced reported turnovers and actual sales figures.

Investigations were initiated in November 2025, focusing on the food and beverage sector. Officials revealed that some businesses had been using manipulated billing software to hide income, a fact unearthed during a probe conducted by the department's Hyderabad wing.

(With inputs from agencies.)