The Income Tax department started by looking into a few extremely popular Hyderabad biryani chains like Pista House, Shah Ghouse, and Mehfil. What began as a focused probe soon opened up something much bigger. During the investigation, officials discovered signs of large-scale sales suppression in the restaurant industry across India.
They did not just check a few bills. They analyzed around 60 TB of billing data taken from a popular restaurant billing software used by over one lakh restaurants nationwide. This software alone had data linked to about 1.77 lakh restaurant IDs. Using advanced data analytics and AI tools, including Generative AI, officials studied transactions from 2019 to 2020 and from 2025 to 2026.
The total billing recorded in the system during this period was about Rs. 2.43 lakh crore. But based on detailed analysis and sampling, officials estimate that nearly 27% of sales were suppressed. That roughly adds up to around Rs. 70,000 crores in hidden turnover.
How was this done? The main trick was deleting cash transactions. Restaurants would record all sales initially, including card, UPI, and cash, to avoid internal theft. But before filing tax returns, some allegedly went back into the system and deleted a portion of cash invoices. In some cases, even 30 days of billing data was wiped out. This reduced both income tax and GST liabilities.
Out of the Rs. 70,000 crore estimated suppression, about Rs. 13,317 crore was directly linked to post billing deletions detected in the software itself.
States like Karnataka, Telangana, Tamil Nadu, Maharashtra, and Gujarat showed high levels of such deletions. Andhra Pradesh and Telangana alone accounted for over Rs. 5,000 crores in suppressed sales.
The highest instances of evasion were found in Tamil Nadu, Karnataka, Telangana, Maharashtra, and Gujarat. Karnataka alone showed deletions of nearly Rs. 2,000 crores.
The investigation has now expanded nationwide. Officials believe this may just be the beginning, as many other billing platforms are also used across the country. The big takeaway is that AI based audits are changing how tax enforcement works, and officials believe this could just be the tip of a much larger problem.
I-T Hyderabad cracks ₹70,000 crore turnover suppression in restaurant sector across India
A data-driven investigation by the Income Tax department has uncovered large-scale turnover suppression in the food and beverages sector, with officials estimating concealed sales of at… pic.twitter.com/DhVj5bLfoq
— Sudhakar Udumula (@sudhakarudumula) February 19, 2026
Probe into hyderabad Biryani joints blows lid off multi crore IT scam..
70000 crores income suppressed by f&b industry since 2019.
The software tracks about 10% of the total restaurant business pic.twitter.com/YYPnV5uOSN
— mukulagarwal (@MukulAgarwal66) February 19, 2026
