Income Tax survey on Restaurants reveals suppression of sales of around Rs. 408 crore

To further expand the investigation into the tax evasion identified in the food and beverage industry in November 2025, the Income Tax Department carried out a nationwide survey on March 8, 2026. The exercise covered 62 restaurants across 46 cities in 22 states.

During the investigation, the officials found that many restaurants were hiding their sales by deleting bills in bulk and making modifications. The preliminary investigation revealed sales suppression of Rs 408 crore.

In many cases, the recorded sales were not even fully recorded in the financial accounts or tax filing, and some transactions were excluded from reported sales.

The department, with the help of AI-enabled analytical tools, examined the data of transactional data from 1.77 lakh restaurants in the food and beverage sector. A comparison of this data with the restaurant’s declared turnover led to the uncovering of large-scale under-reporting of income.

To encourage the taxpayers for voluntary compliance, the department has started the Saksham Nudge campaign. Under this campaign, the taxpayers are advised to voluntarily correct their mistakes by filing an updated return under Section 139(8A) of the Income Tax Act.

Under the campaign, the department will send emails and messages to the identified 63,000 restaurants, asking them to update their returns before March 31, 2026.