Aviva was ordered to pay the tax along with a 100 per cent penalty, of a total of 653 million rupees ($7.5 million) as the order specified. The vendors were said to be ‘puppets’ who aided Aviva in claiming fictitious tax credits
A February 5 order reviewed by Reuters states that British insurance firm Aviva’s India unit must pay $7.5 million in back taxes and penalties, according to a recent media report. This order followed an investigation that found the unit had practised fraudulent tax evasion.
It is alleged that between 2017 and 2023, Aviva India paid $26 million to third parties in the name of marketing services. However, the authorities believe the third parties were merely names used to disguise illegal commission payments from Aviva’s agents. Aviva fraudulently received tax credits by issuing fictitious invoices and taking cash payments, thereby evading $5.2 million in taxes.
Setting an estimate of how much the company had purposefully slacked taxes, the Joint Tax Commissioner Aditya Singh Yadav said that the company had avoided payment of 326 million rupees ($3.8 million). After listening to Aviva’s representations, the company was directed to pay the tax as well as a 100 per cent penalty, to a total of 653 million rupees ($7.5 million). The vendors were described as ‘puppets’ who helped Aviva secure counterfeit tax credits.
Regarding the ruling, Aviva India said it would appeal the decision and assured that the order would not have an impact on its business.
The firm has operations in India as a joint venture with Dabur Invest Corp which raised its stake to 26 per cent after Aviva increased its holding from 49 per cent to 74 per cent in 2022. Meanwhile, Dabur has not commented on the issue, according to the media report.
The case of tax evasion could tarnish the reputation of the company with its customers. Policyholders may lose trust and feel uneasy about dealing with an insurer who is embroiled in legal and financial troubles.