From Hyderabad biryani to Bengaluru idli: 'Ghost' feature in billing system that hid Rs 70,000 crore from tax net

An Income Tax Department investigation that began with biryani restaurant chains in Hyderabad has uncovered a nationwide tax evasion racket in the food and beverages industry. Officials say suppressed sales could run into tens of thousands of crores across India.

By analysing 60 terabytes of transactional data from a widely used billing software platform, investigators detected sales suppression of at least Rs 70,000 crore since the 2019–20 financial year. The software reportedly controls nearly 10% of the restaurant billing market.

In Andhra Pradesh and Telangana alone, authorities found suppressed turnover worth ₹5,141 crore. Physical and digital checks of just 40 sample restaurants in the two states revealed suppression of nearly ₹400 crore.

Investigators found that out of the Rs 70,000 crore flagged, post-billing deletions totalled Rs 13,317 crore. These deletions were traced to backend operations within the billing software, raising concerns about systemic misuse.

A bulk deletion function within the POS software allowed restaurants to erase bills for selected date ranges — sometimes up to 30 days at a time. Officials said there appeared to be no clear restriction on how frequently this feature could be used.

One key pattern identified was the selective removal of cash bills. Restaurants allegedly retained only a portion of cash transactions while deleting the rest, thereby lowering reported turnover for income tax and GST filings.

Another red flag was modification of bills after generation. In one cited case, an invoice of Rs 2,784 was allegedly altered to Rs 27. Investigators said suspicious edits often involved steep reductions and were made days or months later.

Among states, Karnataka recorded the highest deletions at around Rs 2,000 crore, followed by Telangana (Rs 1,500 crore) and Tamil Nadu (Rs 1,200 crore). The top five states flagged were Tamil Nadu, Karnataka, Telangana, Maharashtra and Gujarat.

In Hyderabad alone, 416 cases showed suppression exceeding Rs 1 crore. Officials also found 155 cases where suppressed turnover was more than 12 times the declared income, and several instances of zero or negligible GST filings.

Investigators used high-capacity forensic systems and AI tools, including Generative AI, to analyse 1.77 lakh restaurant IDs across six financial years. Officials believe the findings may be only the tip of the iceberg, as multiple billing platforms operate across the country.