British insurer Aviva has said that its India unit is "actively engaging" with local authorities in connection with alleged tax evasion practices, reported Reuters.
In a statement on 31 August, a UK-based spokesperson for Aviva referred to the matter as "an industry-wide issue", adding its Indian joint venture was "actively engaging with the relevant authorities".
The Income Tax Department found that British insurer Aviva breached local regulations capping commissions to sales agents with a system of fake invoices and clandestine cash payments, reported Reuters citing a notice it has seen.
This Aviva case is part of a broader investigation involving over a dozen Indian insurers for allegedly evading $610m in unpaid taxes, interest, and penalties.
Aviva's India business paid about $26m between 2017 and 2023 to entities who purportedly provided marketing and training services, according to the tax notice sent to Aviva, dated 3 August. The roughly $26m in fake invoices were used by Aviva incorrectly to claim tax credits and evade $5.2m in taxes, the notice alleged.
The vendors, who did not perform any work, were actually a front for channeling funds to Aviva's agents, said the Directorate General of GST Intelligence, which is responsible for policing violations of indirect taxes.
"Aviva and its officials have indulged in a deep-rooted conspiracy and used the modus of fake invoices (without receipt of services) to pass on certain money to ... insurance distributors of Aviva," investigators wrote in the notice.
The 205-page report included screenshots of emails and WhatsApp messages between Aviva executives and insurance distributors, in which they discussed ways to skirt compensation regulations. It also contained summaries of interviews conducted by tax officials with executives like Aviva India chief financial officer Sonali Athalye, who described how payments were made.