British insurer Aviva’s India unit has been ordered to pay $7.5 million in back taxes and penalties after authorities found it engaged in fraudulent practices to evade taxes, according to a February 5 order reviewed by Reuters.
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An investigation revealed that between 2017 and 2023, Aviva India paid approximately $26 million to vendors supposedly providing marketing services. However, authorities found these vendors were merely fronts used to funnel illegal commissions to Aviva’s agents beyond regulatory limits. By using fake invoices and cash payments, Aviva incorrectly claimed tax credits and evaded $5.2 million in taxes.
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After reviewing Aviva’s defence, Joint Tax Commissioner Aditya Singh Yadav concluded the company had deliberately evaded taxes amounting to 326 million rupees ($3.8 million). Following this, Aviva was ordered to pay this amount along with a 100% penalty, bringing the total to 653 million rupees ($7.5 million). The order stated that the vendors were mere “puppets” in Aviva’s scheme to claim bogus tax credits.
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. The company operates in India as a joint venture with Dabur Invest Corp., which owns a 26% stake after Aviva increased its holding from 49% to 74% in 2022. Meanwhile, Dabur has not commented on the issue.
Aviva’s India business reported a profit after tax of only $10 million in the 2023-24 financial year.
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