The Income Tax Department has launched a nationwide investigation into alleged sales suppression and tax evasion by restaurants, estimated at Rs 70,000 crore.
Searches were conducted in Ahmedabad, Surat and Rajkot on Thursday as part of the probe into billing software and cloud-based systems allegedly used to conceal sales and evade taxes.
The department had earlier detected suspected tax evasion exceeding Rs 25,000 crore in the restaurant sector.
Data from food delivery platforms Swiggy and Zomato indicates that around 8,000 restaurants had tax deducted at source (TDS) against their names but did not file income tax returns.
An analysis of data from 2021-22 to 2024-25 estimates tax evasion of Rs 7,500 crore through these restaurants.
In 2024-25, they generated nearly Rs 2,700 crore in revenue, attracting around Rs 25 crore in TDS. The government collected about Rs 75 crore in TDS over four years, while the number of restaurants in the system rose by 65 per cent.
Dine-in sales outside TDS net
Food delivery orders currently attract TDS of 0.1 per cent, compared with 1 per cent in the initial years. However, dine-in sales, which can be three to four times delivery revenue, are not covered by this deduction, suggesting actual business turnover could be much higher.
Fresh compliance drive planned
The department is planning a fresh drive to encourage restaurants to file returns and pay outstanding taxes. An earlier survey of nearly 1.8 lakh restaurants found average income underreporting of 30-35 per cent.
Authorities also suspect unreported cash flows through employees’ accounts and concealed bills in cloud-based systems. The department is now focusing on restaurants earning Rs 2-5 crore, particularly in major cities.
Source from: https://www.ahmedabadmirror.com/i-t-department-probes-rs-70000cr-restaurant-sales-suppression/81924072.html
