New Delhi: India’s Income Tax Department has launched a large-scale verification drive across the restaurant industry after detecting patterns of possible tax evasion linked to underreported sales.
The department began investigating the Food and Beverage sector in November 2025 after identifying suspicious tax patterns. Using AI-enabled analytical tools, officials examined advanced transactional data related to about 17 lakh restaurants. This data was compared with income tax returns filed by businesses. The analysis suggested several cases of potential under-reporting of income, including instances where recorded sales did not fully match the figures reported in financial accounts or tax filings.
Following the analytical review, the department carried out a nationwide survey on March 8, 2026. The exercise covered 62 restaurants located in 46 cities across 22 states. Preliminary findings from the verification indicated possible suppression of sales amounting to around Rupees 408 crore. Authorities have stated that further investigations related to these findings are currently underway.
Alongside the enforcement action, the department has initiated the SAKSHAM NUDGE campaign aimed at improving voluntary compliance among taxpayers in the sector. As part of this initiative, taxpayers have been encouraged to review their filings and update their income tax returns under Section 139(8A) of the Income Tax Act. In the first phase of the campaign, messages will be sent to around 63,000 restaurants advising them to revise or update their returns before March 31, 2026.
Officials said the exercise is intended not only to identify discrepancies but also to promote a trust-based approach to tax compliance. The department emphasized that the campaign will guide businesses on correct reporting practices while addressing potential underreporting in the sector. The verification exercise forms part of the department’s broader effort to strengthen transparency in tax reporting across high-transaction industries.
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