Using AI and forensic analysis of 60 terabytes of billing data linked to 1.77 lakh restaurants, investigators found widespread deletion and manipulation of invoices to evade GST and income tax.
BY PC Bureau
HYDERABAD, February 19, 2026: A sweeping investigation triggered by suspected irregularities at popular biryani restaurant chains in Hyderabad has exposed what officials describe as one of the largest tax evasion rackets in India’s food and beverage sector, with suppressed sales estimated at over Rs 70,000 crore.
The probe, led by the Hyderabad investigation unit of the Income Tax Department, relied on forensic analysis of nearly 60 terabytes of billing and transaction data obtained from a pan-India restaurant billing software platform used by more than one lakh eateries. Investigators found that restaurants had collectively concealed at least Rs 70,000 crore in sales turnover since the 2019–20 financial year.
Officials said the exact tax liability, including penalties, is still being calculated. The billing software under scrutiny is believed to account for roughly 10% of India’s restaurant billing software market, raising concerns that the actual scale of evasion could be significantly higher.
AI and Big Data Analysis Reveal Widespread Manipulation
Investigators deployed advanced analytics tools, including artificial intelligence and Generative AI, to process and examine data linked to approximately 1.77 lakh restaurant IDs. The analysis uncovered systematic manipulation of billing records, including post-billing deletions and edits designed to reduce reported revenues.
Across India, restaurants using the software deleted bills worth Rs 13,317 crore after they were initially recorded, forming part of the broader Rs 70,000 crore in suppressed turnover. In Andhra Pradesh and Telangana alone, concealed sales were estimated at Rs 5,141 crore.
READ: Former UK Royal Prince Andrew Held Amid Probe Into Epstein Links
READ: Trump’s War Option Looms as Massive Air Armada Encircles Iran
Detailed audits and on-ground inspections of just 40 restaurants in the two states revealed suppression of around Rs 400 crore, suggesting the practice was widespread rather than isolated.
Southern States Among Worst Affected
The investigation identified five states with the highest levels of tax evasion: Tamil Nadu, Karnataka, Telangana, Maharashtra, and Gujarat.
Karnataka recorded the highest volume of deleted transactions, amounting to roughly Rs 2,000 crore, followed by Telangana at Rs 1,500 crore and Tamil Nadu at Rs 1,200 crore. Officials noted that many restaurants not only deleted invoices but also under-reported their income in tax filings. Based on sample assessments, authorities estimate that nearly 27% of total sales were concealed from tax authorities.
The data analysis was conducted at the department’s digital forensic and analytics laboratory in Hyderabad after investigators accessed billing records stored at the software provider’s data centre in Ahmedabad.
How Restaurants Allegedly Manipulated Billing Records
Investigators uncovered several methods used to evade taxes. Restaurants typically entered all transactions—including cash, card, and UPI payments—into billing systems to maintain internal transparency and prevent employee fraud. However, the same systems were allegedly exploited to manipulate official records.
One common tactic involved selectively deleting cash invoices while retaining digital payment records, thereby reducing reported revenue and tax liability. In other cases, restaurants carried out bulk deletions, erasing billing data for entire days or even weeks before filing tax returns that reflected only a fraction of actual sales.
The dataset analysed covered total billing of approximately Rs 2.43 lakh crore across six financial years, from 2019–20 to 2025–26.
Probe Expands Nationwide as Authorities Warn of Larger Scam
The investigation initially focused on restaurants in Hyderabad, Visakhapatnam, and other cities in Telangana and Andhra Pradesh. After uncovering clear evidence of manipulation, the Central Board of Direct Taxes expanded the probe nationwide.
Officials used AI-powered tools to link GST registrations with restaurant identities by analysing publicly available records and online data, enabling investigators to map evasion patterns quickly and accurately.
Authorities believe the findings represent only a fraction of the total tax evasion in the restaurant industry. With multiple billing software platforms operating nationwide, officials say further investigations could reveal even larger-scale manipulation.
The probe underscores how digital billing systems, originally designed to improve transparency and compliance, were allegedly misused to conceal thousands of crores in taxable income—turning a routine software tool into a powerful instrument of financial fraud.
