Manas Dasgupta
NEW DELHI, Feb 19: Massive under-billing, may be to the tune of evading tax of over Rs 70,000 crores by the eating houses across the country, has been detected by the police while investigating three popular Hyderabad-based biryani chains.
It started as a simple check on biryani restaurants in Hyderabad but it led the police to uncovering a huge tax evasion scam hiding inside restaurants across India. Police found that many restaurants were earning money but pretending they earned much less, so they could avoid paying taxes. This added up to around ₹70,000 crore of tax evasion over the last few years.
The discovery was made by studying a giant computer system used by restaurants to make bills. This billing software is used by more than one lakh restaurants across the country. Using computer tools and artificial intelligence, officials checked billing records from nearly 1.77 lakh restaurants and examined about 60 terabytes of data. They found that after customers paid, many bills were quietly deleted or changed inside the system, the police said.
Across India, restaurants using the same software erased bills worth over ₹13,000 crore. In Andhra Pradesh and Telangana alone, hidden sales came to more than ₹5,100 crore. To double-check, officers visited 40 restaurants in person and compared real sales with computer records. Even this small check revealed nearly ₹400 crore in missing sales, media reports said.
Sources said the investigation, led by the Income Tax Department’s Hyderabad unit, initially focused on suspected financial irregularities and unaccounted revenue at some of the popular biryani serving restaurants in Hyderabad. These suspicions led to raids at 30 locations – from restaurant premises to the residences of the three brands’ senior management – in November last year.
Sources said analysis of digital records, including UPI transactions routed through multiple accounts, recovered from those raids pointed tax officials to a potentially massive scam. Specifically, officials analysed an estimated 60 TB (terabytes) of billing data from POS (point of sale) system that covers over 1.7 lakh restaurant IDs across the country.
The data expanded the probe to a pan-India operation in which a certain billing software used by ‘thousands of eateries’ was found to feature a ‘bulk delete’ function that erases entire blocks of sales records, in some cases up to 30 days, leaving little trace of the deleted transactions. This feature, with other functions like deletion of individual bills and post-generation modification, were misused to suppress sales figures, tax officials alleged.
Officials claimed they found signs of systematic deletion and alteration of billing records, which would have enabled restaurants to under-report turnover and reduce tax liabilities. Initial estimates suggest the suppressed sales from 2019/20 onwards were worth at least Rs 70,000 crore. Sources said suppression of billing records was also detected across thousands of PANs (permanent account numbers) with some now showing undeclared sales of over Rs 1 crore.
The Income Tax Department has not yet released a formal statement. Authorities, however, continue to reconstruct deleted billing data, and tax demands, penalties
In Andhra Pradesh and Telangana alone, hidden sales came to more than ₹5,100 crore. To double-check, officers visited 40 restaurants in person and compared real sales with computer records. Even this small check revealed nearly ₹400 crore in missing sales, the report noted.
Some states stood out more than others. The highest evasion was found in Karnataka, followed by Telangana and Tamil Nadu. Shockingly, some restaurants didn’t even bother deleting bills, they simply told the tax department they earned less money than they actually did. From the data studied so far, officials believed that about one-fourth of all restaurant sales were hidden.
Restaurants usually enter all payments, cash, cards, and UPI, into billing software so staff cannot steal money. But investigators found that owners themselves were misusing the system. One common trick was deleting only cash bills, since cash is harder to track. Another trick was wiping out all bills for certain days or even a whole month, and then filing tax returns showing very low income, officials said.
The data covered restaurant sales of nearly ₹2.43 lakh crore over six years. To analyse everything, officers worked from digital labs using AI tools that matched restaurant records with online information like GST numbers and public listings.
The investigation first began in Hyderabad, Visakhapatnam, and nearby towns. Once officials realised how big the scam was, the probe was expanded to the entire country. Officials said this is probably just the beginning, because many other billing software systems exist, and they may be hiding similar secrets.
