A new in-depth probe has pointed to an alleged tax evasion in India’s restaurant industry, with several well-known biryani and dining chains under scrutiny.
According to a report on The Times of India, analysis of billing records suggests that eateries may have concealed sales of Rs700bn ($7.7bn), across multiple financial years beginning in 2019–2020.
The investigation, led by the Hyderabad investigation unit of the Income Tax Department, used forensic data analytics and AI tools to analyse large volumes of billing records from restaurants across the country.
The report said that the investigators examined 60 terabytes of transaction data from a billing software platform used by more than 100,000 restaurants.
The platform, which accounts for approximately 10% of India’s restaurant billing market, gave access to records tied to around 177,000 restaurant IDs.
From this dataset, investigators identified suppressed turnover worth at least $7.7bn since 2019–2020. The department has not yet finalised the tax demand or penalties on the concealed income.
Data from the software provider showed that restaurants across India carried out post-billing deletions totalling Rs133.7bn.
The highest levels of deletion activity were observed in the Indian states of Gujarat, Karnataka, Maharashtra, Telangana, and Tamil Nadu.
Officials noted that in some cases, restaurants did not delete entries from the software but still allegedly under-reported revenues in income tax returns.
Restaurants typically record card, UPI [Unified Payments Interface] and cash transactions in the billing system to prevent internal pilferage by employees.
Documents cited by The Times of India described one recurring pattern as “the selective deletion of cash invoices, where restaurants allegedly retained only a portion of cash entries and deleted the rest to reduce income tax and GST [goods and services tax] exposure”.
Investigators also identified a “bulk deletion” method, in which bills were erased for selected date ranges—sometimes covering up to 30 days—before tax returns were filed, showing only a portion of the actual sales.
Overall, the database reviewed covered Rs2,430bn of billing across six financial years from 2019–2020 to 2025–2026.
High-capacity systems and AI tools, including generative AI, were used to analyse the transactions and to map GST numbers to individual restaurants using open-source and publicly available information.
Following the initial findings, the Central Board of Direct Taxes has decided to extend the investigation to a broader set of restaurants across India.
