UPI Data Used in Restaurant Tax Evasion Probe
A tax evasion investigation in Hyderabad is using UPI transaction data, QR codes, and digital receipts to uncover unreported income in the restaurant and retail sectors. The probe demonstrates how digital payment trails are providing authorities with new tools for tax compliance enforcement among small businesses.
- The investigation, which started with a few popular biryani restaurants in Hyderabad, has expanded into a nationwide probe. It is now estimated that restaurants across India may have suppressed sales worth at least ₹70,000 crore since the 2019-20 financial year. - Tax officials are analyzing a massive 60 terabytes of transactional data from a single billing software platform used by over 100,000 restaurants, which represents about 10% of the market. This data includes approximately ₹2.43 lakh crore in billing transactions across 1.77 lakh restaurant IDs. - A primary method of evasion involved the selective deletion of cash invoices after a transaction was completed. Investigators found that bills worth over ₹13,317 crore were deleted post-billing, with officials estimating that this resulted in the suppression of about 27% of total sales. - The probe initially focused on three prominent Hyderabad restaurant chains—Pista House, Shah Ghouse, and Mehfil—with searches conducted at nearly 30 of their locations in November 2025. These three chains alone are suspected of suppressing around ₹600 crore in income. - While the investigation originated in Hyderabad, the highest value of deleted transactions was found in Karnataka (approximately ₹2,000 crore), followed by Telangana (₹1,500 crore) and Tamil Nadu (₹1,200 crore). - Authorities are using artificial intelligence and generative AI tools to analyze the vast dataset, mapping GST numbers and PANs to individual restaurant outlets to identify discrepancies between reported income and actual sales data. - This isn't the first instance of tax authorities leveraging digital payment data; the Karnataka Commercial Taxes Department previously used UPI data from 2022 to 2025 to identify and issue notices to thousands of small vendors suspected of evading GST registration. - The Income Tax Department can legally track all UPI transactions as they are linked to bank accounts and Permanent Account Numbers (PANs), requiring individuals and businesses to report this revenue. Authorities have also used the Benami Transactions (Prohibition) Act to issue notices to payment gateways to disclose details of individuals linked to suspicious UPI IDs.
