The Indian branch of British insurer Aviva has been ordered to pay $7.5 million in back taxes and penalties after an investigation uncovered fraudulent practices used to evade taxes. The investigation found that between 2017 and 2023, Aviva India paid around $26 million to vendors claiming to provide marketing services, but it turned out that these vendors were merely fronts to channel illicit commissions to Aviva’s agents, exceeding regulatory limits. The company claimed tax credits and evaded $5.2 million in taxes through fraudulent invoices and cash transactions.
The probe, conducted by the Joint Tax Commissioner Aditya Singh Yadav, concluded that Aviva had intentionally evaded taxes totaling INR 326 million ($3.8 million). As a result, Aviva was ordered to pay the entire amount, along with a 100% penalty, which brings the total to INR 653 million ($7.5 million).
Aviva India has announced that it will contest the decision through an appeal and assured that the order will not impact its operations. The company needs to take immediate action to rectify its actions and pay the amount owed to the tax authorities. The penalty is a significant setback for Aviva India, and it may face regulatory consequences in the future if it fails to comply with the order. The incident highlights the need for companies to ensure compliance with tax laws and regulations, and to maintain transparency in their business practices.