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Tax Survey Finds ₹408 Crore Underreported by Restaurants across India; 63,000 Outlets To Get Compliance Notices
Moneylife Digital Team 10 March 2026
Economy & Nation
The income tax (I-T) department has detected suppression of sales worth around ₹408 crore in the restaurant sector following a nationwide survey conducted across multiple cities, the Union ministry of finance says in a release.
 
According to an official statement, the department conducted surveys on 62 restaurants across 46 cities in 22 states on 8 March 2026 as part of a broader investigation into tax evasion patterns in the food and beverage (F&B) sector.
 
The preliminary findings revealed that several establishments had under-reported their sales in I-T filings.
 
The investigation began in November 2025, when the tax department started examining possible tax evasion practices in the restaurant industry.
 
As part of the probe, officials analysed transactional data from around 177,000 restaurants across the country using artificial intelligence (AI)-enabled analytical tools. This data was then compared with the turnover figures declared by these establishments in their income tax returns (ITRs).
 
“The analysis revealed large-scale under-reporting of income,” the ministry says.
 
In some instances, recorded sales were not fully reflected in financial accounts or tax filings, while certain transactions were entirely excluded from reported turnover.
 
Officials also found that some restaurants were engaged in deleting bulk bills or modifying sales records to suppress their actual revenues.
 
Based on these findings, the department conducted the nationwide survey earlier this month.
 
“Consequently, on 8 March 2026, 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 ₹408 crore,” the I-T department says.
 
Investigations are still underway and officials indicated that the overall scale of tax evasion could become clearer once the probe is completed.
 
While pursuing enforcement action, the tax department says it is continuing to emphasise voluntary compliance and a trust-based approach.
 
To encourage taxpayers to correct discrepancies, the department has launched a new initiative called 'SAKSHAM NUDGE'.
 
The campaign aims to guide and advise taxpayers who may have incorrectly reported their income.
 
 
In the first phase of the initiative, emails and SMS messages will be sent to around 63,000 identified restaurants asking them to review and update their tax returns.
 
The department has urged these businesses to file updated returns under Section 139(8A) of the Income Tax Act before 31 March 2026.
 
The tax department says the initiative is intended to give businesses an opportunity to voluntarily correct errors before stronger enforcement measures are considered.
 
“Taxpayers are encouraged to file updated returns under Section 139(8A) of the Income Tax Act,” the ministry says.
 
According to officials, the investigation into the restaurant sector will continue, and a clearer picture of the extent of tax evasion is expected once the probe concludes.
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