NEW DELHI: The Income Tax Department has sent emails to 63,000 restaurants for under-reporting their income, “asking” them to update their returns before March 31.
The emails were sent to these restaurants after analyzing transaction data from around 1,77,000 restaurants using AI tools.
The department conducted an investigation into tax evasion patterns in the food and beverage sector in November 2025. During the process, several restaurants were found to be involved in deleting oversized invoices and other alterations to suppress actual sales, a Finance Ministry statement said on Monday.
“Advanced analyzes of transaction data from around 1.77 lakh restaurants in the food and beverage sector were conducted using AI-powered analytical tools. The data was compared with the turnover declared in income tax returns. The analysis revealed significant under-reporting of income.”
It added that in some cases, recorded sales were not fully reflected in financial accounts or tax returns, and certain transactions were excluded from reported sales.
“Hence, on March 8, 2026, a nationwide survey was conducted on 62 restaurants in 46 cities across 22 states. On a preliminary basis, the operation revealed sales funnel amounting to around Rs 408 crore,” he said, adding that further investigations were underway.
She added that the Ministry continues to emphasize voluntary compliance and a trust-based approach, stressing its motivational campaign. The campaign aims to guide and advise taxpayers on correcting their mistakes.
Taxpayers are encouraged to file updated returns under Section 139(8A) of the Income Tax Act. The statement said that in the first phase, emails and letters will be sent to the identified 63,000 restaurants, asking them to update their revenues before March 31, 2026.
