My husband runs a small mobile food stall. The raw food we buy which we eventually cook and sell, we claim it on taxes. According to the state government the food left at the end of the day we are suppose to throw it as it exceeds the food safety limit. However, that would be israf and hence, we don’t throw it and instead we use it at home. My question is, is it necessary for us to show it and cut it from taxes or is it fine if we claim all of it on taxes?

As per our marajie instructions to follow law of the land, you need to in this case to show what you do in the tax calculations accordingly. Alternatively you can give the food left over to the needy, or to family and friends (and may be able to then ask for some back). It depends if the government allows you to keep it. Perhaps a permission is needed from them.