The Indian branch of British insurer Aviva has been directed to pay $7.5m in back taxes and penalties after authorities uncovered fraudulent practices aimed at tax evasion, as detailed in a February 5 order reviewed by Reuters.
An investigation found that between 2017 and 2023, Aviva India paid around $26m to vendors purportedly offering marketing services.
However, authorities discovered that these vendors were merely fronts used to channel illicit commissions to Aviva’s agents, exceeding regulatory limits. Through fraudulent invoices and cash transactions, Aviva wrongly claimed tax credits and evaded $5.2m in taxes.
After examining Aviva’s defense, Joint Tax Commissioner Aditya Singh Yadav determined that the company had intentionally evaded taxes totalling INR326m ($3.8m).
As a result, Aviva was directed to pay this amount along with a 100% penalty, raising the total to INR653m ($7.5m).
In response to the ruling, Aviva India stated that it would contest the decision through an appeal and assured that the order would have no impact on its operations.