The Indian unit of British insurance company Aviva has been ordered to pay nearly $7.5 million in back taxes and penalties following a probe by the Indian tax authority. The investigation found that Aviva India had evaded taxes worth nearly $5.2 million, and engaged in fraudulent activities, including creating fictitious invoices and making incorrect tax credit claims.
Between 2017 and 2023, Aviva India made payments of around $26 million to vendors for marketing services, but these payments were allegedly used to provide agents with commissions exceeding regulatory caps. As a result, Aviva India made incorrect tax claims and evaded taxes.
The tax authorities have slapped a 100% penalty on Aviva India, making the total liability of Rs653 million. Aviva India has denied any wrongdoing, calling the allegations “incorrect and unsustainable” and stating that the vendors provided legitimate services.
However, the investigation findings suggested that Aviva executives and insurance distributors had discussed circumventing compensation limits through fraudulent invoices and improper tax credit claims. The company had also allegedly hired “agent mentors” to issue fake invoices and facilitate excess commission payments.
Aviva India is planning to contest the tax order, despite the evidence presented by the tax authorities. The company’s denial of any misconduct is in contrast to the investigation findings, which indicate that Aviva executives and insurance distributors had been involved in fraudulent activities.