Biryani trail: How AI uncovered Rs 70,000 crore tax evasion scam starting with Hyderabad biryani chains

The investigation, powered by forensic data analytics and AI tools, analysed massive volumes of billing records used by restaurants across the country.

• IT probe finds Rs 70,000 crore in undeclared restaurant revenue
• Restaurants deleted cash invoices to evade tax and GST
• 27 percent of total sales were suppressed, officials estimate

Did our AI summary help?

What started as a closer look at popular biryani restaurant chains in Hyderabad, has led to the unearthing of widespread manipulation of restaurant billing systems and massive amounts of undeclared revenue, potentially Rs 70,000 crore, across the food industry.

According to a report by The Times of India, an in-depth probe by the Income Tax department’s Hyderabad investigation unit has uncovered suspected sales suppression running into at least Rs 70,000 crore since the 2019–20 financial year.

The investigation, powered by forensic data analytics and AI tools, analysed massive volumes of billing records used by restaurants across the country.

Tax officials reportedly analysed an estimated 60 TB, or terabytes, of billing data from a POS, or point of sale, system that covers over 1.7 lakh restaurant IDs across the country.

The same publication quoting investigators said restaurants typically enter all sales — card, UPI and cash — into the software to prevent internal manipulation by servers, cashiers and managers.

However, one pattern flagged during the probe was the selective deletion of cash invoices. In several cases, restaurants allegedly retained only a portion of cash entries and deleted the rest to reduce income tax and GST exposure.

Another pattern involved bulk deletions — wiping bills clean for a chosen date range, including up to 30 days of billing — followed by filing returns that reflected only a fraction of actual sales.

The probe initially began with searches in Hyderabad, Visakhapatnam and other towns in Telangana and Andhra Pradesh, where officials first found evidence that the software was being used to suppress sales. The Central Board of Direct Taxes later expanded the investigation nationwide.

Officials said some restaurants did not even bother to delete their records even as they under-reported sales in their income tax returns. Based on a sample estimate, officials have concluded that 27% of total sales were suppressed.

Investigators accessed data from the billing software provider’s centre in Ahmedabad and analysed it at the department’s digital forensic and analytics lab in Ayakar Bhavan, Hyderabad.

Officials believe the current findings may only be the tip of the iceberg, noting that multiple billing platforms operate in the sector and could face similar backend scrutiny.