Aviva India faces $7.5 million fine for fake invoice scheme: report

British insurer Aviva’s India arm has been ordered to pay $7.5 million in back taxes and penalties after Indian authorities found the company was involved in improper tax practices, Reuters reported on Monday, citing a 5 February order that has not ben made public.

In an 3 August notice last year, Indian tax authorities alleged that to expand its business, Aviva India paid about $26 million between 2017-23 to vendors who purportedly provided marketing services but were only a front to give Aviva’s agents excess commissions beyond regulatory limits, Reuters had reported then.

Tax authorities had alleged that Aviva incorrectly claimed tax credits and evaded $5.2 million in taxes using fake invoices and cash payments.

Following a hearing in Aviva’s defense, joint tax commissioner Aditya Singh Yadav ruled that the company evaded tax of around Rs32.6 crore (about $3.8 million), which it must pay with a 100% penalty, totaling Rs65.3 crore, or $7.5 million, Reuters reported.

Aviva India told Reuters that it “will contest the latest order through an appeal. The order will have no impact on its operations.”

Aviva India, which operates in a highly competitive market, posted a profit after tax of $10 million in fiscal 2024.