1.77 lakh restaurants under taxman's scanner; Rs 408 crore sales suppression detected—63,000 businesses asked to fix filings

The Income Tax Department said on Monday that it had carried out a nation-wide verification exercise on restaurants in cases related to suspected suppressing of turnover. It also kicked off a special campaign, called 'Saksham Nudge', aimed at guiding and advising taxpayers to correct their tax filing mistakes while prompting voluntary compliance.

In the first phase, said the income tax authorities, emails and messages will be sent to the identified 63,000 restaurants, urging them to update their returns before March 31.

In November, income tax authorities conducted probe related to a tax evasion pattern in the food and beverage sector. During the exercise, noted the I-T department, it was found that several restaurants were engaged in deletion of bulk bills and other modifications to suppress the actual sales.

Add Zee Business as a Preferred Source

Advanced analytics of transactional data from about 1.77 lakh restaurants in the sector was carried out using AI-enabled analytical tools, noted the taxman.

This data was then compared with the turnover declared in their respective income tax returns (ITRs), revealing large-scale under-reporting of income.

In some cases, recorded sales were not fully reflected in financial accounts or tax filings and certain transactions were excluded from reported sales.

Consequently, on March 8, a nationwide survey was conducted on 62 restaurants across 46 cities in 22 states.

On a preliminary basis, the exercise revealed suppression of sales amounting to around Rs 408 crore.

Investigations in this regard are underway, according to the Income Tax Department.

The department continues to emphasise voluntary compliance and a trust-based approach.

The I-T department encouraged taxpayers to file updated returns under Section 139(8A) of the Income Tax Act by March 31, wrote Income Tax Commissioner and CBDT spokesperson V Rajitha.

Here are answers to frequently asked questions (FAQs) on the subject:

Who will receive notices under the ‘Saksham Nudge’ campaign?

In the first phase, emails and messages will be sent to about 63,000 identified restaurants, asking them to review and update their tax filings before March 31.

What action has the I-T department taken against restaurants found to be surpassing their turnovers?

The department has conducted a nationwide verification exercise on restaurants over suspected suppression of turnover. The move follows findings of possible tax evasion in the food and beverage sector.

What triggered the verification exercise?

Investigations in November 2025 revealed patterns of suspected tax evasion in the food and beverage sector, including deletion of bulk bills and other modifications to reduce reported sales.

How did the department detect the irregularities?

Authorities analysed transactional data from around 1.77 lakh restaurants using AI-enabled analytical tools and compared it with the turnover reported in their Income Tax Returns (ITRs).

What did the analysis reveal?

The exercise found large-scale under-reporting of income. In several cases, sales recorded in systems were not fully reflected in financial accounts or tax filings, and certain transactions were excluded from reported sales.

How much tax evasion has been detected so far?

Preliminary findings suggest suppression of sales worth around Rs 408 crore, with investigations still underway.

What should taxpayers do now?

The department has urged the said businesses to file updated returns under Section 139(8A) of the Income Tax Act before March 31.