Explained: About the ₹70,000 crore Biryani tax scam, how AI became scamsters’ undoing, and more

Think your favourite biryani is just a meal to enjoy on a weekend with friends and family? In Hyderabad, it is at the centre of one of the largest tax heists in India’s history — the biryani tax scam that cost India ₹70,000 crore. With this explainer, we peel back the layers of the scam, a massive operation where around 27 per cent of all sales were suppressed. 

Find out here what the scam is all about, how it worked, how AI turned the tide and much more. 

What is the Biryani tax scam? 

It refers to a massive tax evasion racket spread across India, which was estimated at ₹70,000 crore, recently uncovered by the Income Tax Department. The probe began with routine checks at popular biryani chains in Hyderabad, including Pista House, Shah Ghouse, and Mehfil, but it quickly expanded to a pan-India investigation involving more than 1.7 lakh restaurant IDs. 

How do biryani outlets operate?

Fast table rotation, bulk takeaway orders and cloud kitchen running multiple brand names from a single setup are standard practices in the restaurant industry. 

Since biryani has standardised pricing and known ingredient ratios, officials could estimate how much would have been sold based on raw material purchases. 

How did the scam work? 

The I-T department’s Hyderabad unit analysed over 60 terabytes of transaction data of a pan-India billing software used by more than 1.7 lakh restaurants, according to a report in The Times of India.

It was discovered after the probe that these eateries had hidden sales turnover worth around ₹70,000 crore since 2019-20. Officials told the publication that the software controlled roughly 10 per cent of the total restaurant billing software market. 

It allowed restaurants to delete entire blocks of sales records in a single click, sometimes up to 30 days of transactions. Since cash is harder to track than digital payments, eateries frequently delete cash invoices while keeping only a portion of them on the books. 

As a result, officials estimate that around 25 to 27 per cent of the total sales were suppressed on average to reduce Income Tax and GST liabilities. 

How did police use AI to catch the scamsters?

To unearth the scam, officials used big data analysis and AI tools, including Generative AI, for crunching the data of 1.77 lakh restaurant IDs. According to the report, the software provider recorded post-billing deletions totalling ₹13,317 crore out of the total ₹70,000 crore, of which sales worth ₹5,141 crore were suppressed in 40 restaurants across Andhra Pradesh and Telangana.

Besides this, post-generation bill modifications worth ₹19,400 crore were detected over the last 6 years. Of the total 3,734 PANs across Telangana and Andhra Pradesh, suppression was detected in 2,650 PANs. 684 cases showed suppression of sales exceeding ₹1 crore, of which 416 were from Hyderabad. 

Zero or no GST turnover was reported in 231 cases, whereas suppression exceeding 12 times the declared turnover was recorded in 155 cases. 

GST numbers were mapped to restaurants using open-source and publicly available online information, using which the police were able to identify the discrepancies quickly. 

Is it limited just to Hyderabad?

The scam was not just limited to Hyderabad as similar irregularities were spotted in eateries across states after officials compared delivery data, GST numbers and internal software lags. The top 5 states where evasion was detected are Tamil Nadu, Karnataka, Telangana, Maharashtra, and Gujarat. 

Karnataka saw a deletion of approximately ₹2,000 crore, followed by Telangana (₹1,500 crore) and Tamil Nadu (₹1,200 crore). 

Is the probe about targeting biryani sellers?

Officials, however, have clarified that the investigation is neither about biryani as a cuisine or a commodity nor is it about targeting biryani sellers. They said that the probe is focused on software-enabled suppression mechanisms across the industry.