IT Hyderabad unit uncovers massive billing fraud in food sector
HYDERABAD: An investigation into biryani restaurant chains in the city has uncovered a wider tax evasion network in the food and beverages sector, with suppressed sales turnover estimated at ₹70,000 crore since 2019-20.
The Income Tax department’s Hyderabad investigation unit analysed 60 terabytes of transactional data from a pan-India billing software used by over one lakh restaurants. Officials said the software accounts for nearly 10% of the country’s restaurant billing software market.
Using big data analytics and Artificial Intelligence tools, including Generative AI, investigators examined transactions linked to 1.77 lakh restaurant IDs. They found that eateries had suppressed sales turnover of at least ₹70,000 crore over six financial years, from 2019-20 to 2025-26. The total billing recorded in the dataset was about ₹2.43 lakh crore.
Officials are yet to compute the exact tax liability and penalties on the suppressed income.
₹5,141 crore suppression in AP, Telangana
Across India, the software provider recorded post-billing deletions amounting to ₹13,317 crore out of the ₹70,000 crore flagged for suppression.
In Andhra Pradesh and Telangana, suppressed sales were pegged at ₹5,141 crore. Detailed physical and digital verification of 40 sample restaurants in the two states revealed suppression of about ₹400 crore.
Based on the sample analysis, officials concluded that nearly 27% of total sales were under-reported.
Tamil Nadu, Karnataka, Telangana, Maharashtra and Gujarat emerged as the top five states where evasion was detected. Karnataka recorded the highest deletion instances at about ₹2,000 crore, followed by Telangana at ₹1,500 crore and Tamil Nadu at ₹1,200 crore.
Officials said some restaurants did not delete billing records but still under-reported sales in their income tax returns.
Selective deletions, bulk wiping of records
Investigators accessed data at the billing software provider’s centre in Ahmedabad and analysed transactions at the department’s digital forensic and analytics lab in Ayakar Bhavan, Hyderabad.
According to documents accessed by TOI, one pattern involved selective deletion of cash invoices. Restaurants allegedly retained only part of the cash entries and deleted the rest to reduce income tax and Goods and Services Tax exposure.
Another method involved bulk deletion of bills for selected date ranges, including up to 30 days of billing. Returns were then filed reflecting only a fraction of actual sales.
Officials said restaurants typically enter all transactions card, UPI and cash into billing software to prevent internal manipulation by staff. The probe found that backend deletions and edits were later carried out to suppress turnover.
The investigation initially focused on Hyderabad, Visakhapatnam and other towns in Telangana and Andhra Pradesh. After preliminary findings suggested systematic suppression, the Central Board of Direct Taxes expanded the probe nationwide.
Officials said the findings could be only the “tip of the iceberg”, as multiple billing platforms operate in the sector and may face similar scrutiny.
