Income tax Dept. carries out nation-wide verification exercise on Restaurants suppressing turnover

The Income Tax Department has recently conducted a nationwide verification exercise targeting restaurants suspected of under-reporting their actual sales. This action follows an earlier investigation carried out in November 2025 that highlighted possible tax evasion practices in the Food and Beverage (F&B) industry.

During the investigation, authorities discovered that some restaurants were allegedly manipulating billing records, including deleting bulk bills and making alterations in transaction data, to reduce the turnover reported in their tax filings. To examine the issue in detail, the department analyzed transactional information of nearly 1.77 lakh restaurants using AI-based data analytics tools and compared it with the turnover declared in their Income Tax Returns (ITR).
The analysis indicated widespread discrepancies where actual sales did not match the income reported to the tax authorities. In several instances, certain transactions were either partially recorded or completely omitted from financial accounts and tax filings.

Based on these findings, the department conducted a nationwide survey on 8 March 2026, covering 62 restaurants located across 46 cities in 22 states. Preliminary results from the survey suggest that sales amounting to approximately ₹408 crore may have been suppressed. Detailed investigations are currently underway.

At the same time, the department continues to promote voluntary tax compliance through a trust-based approach. Under the SAKSHAM NUDGE initiative, identified taxpayers are being encouraged to rectify any discrepancies in their filings. In the first phase of this campaign, about 63,000 restaurants will receive emails and messages advising them to update their returns under Section 139(8A) of the Income Tax Act before 31 March 2026.