British insurer Aviva is facing possible penalties of around US$11 million in India over what investigators consider a “deep-rooted conspiracy” designed to skirt local compensation and tax rules.
Citing a confidential tax notice from the Directorate General of GST Intelligence (DGGI), Reuters said Aviva is accused of breaching agent commission cap regulations via fake vendor deals. Aviva’s Indian business, which is 74% owned by the UK-headquartered group, allegedly used undelivered marketing and training services to channel funds to agents beyond the permitted amount.
Reuters quoted investigators as saying in the DGGI notice: “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.”
Back in November, tax inspectors raided an Aviva office in India, seizing laptops and documents as part of a wider industry probe against companies claiming tax credits illegally. It is estimated that more than a dozen insurance firms in the country owe the Indian government approximately US$610 million in unpaid taxes, interest, and penalties since the introduction of goods and services tax in 2017.
According to the show-cause notice addressed to Aviva, the insurer supposedly used fake invoices worth US$26 million from 2017 to 2023 to evade US$5.2 million in taxes. In their allegations, DGGI investigators cited emails and WhatsApp messages between insurance executives and distributors discussing the purported modus.
Recovered correspondence points to Aviva officials referring to “ORC” – a shortening of ‘over ride commission’ – to indicate agent payments beyond the regulatory limits.
The remainder of Aviva’s operations in India is owned by Dabur Invest Corp., which did not respond to Reuters’ questions. An Aviva spokesperson in the UK, meanwhile, had this to say: “We do not comment on speculation or ongoing legal matters.”
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