India uncovers ‘deep-rooted conspiracy’ involving UK firm – Reuters

New Delhi is investigating several insurance companies over a $610 million tax-evasion scheme 

Aviva, a UK-based insurance company, is being investigated by an Indian agency for allegedly providing fake invoices to claim tax credits as part of a $5.2 million tax evasion scheme, Reuters reported on Friday.

Aviva’s Indian business paid about $26 million to vendors between 2017 and 2023, purportedly for the provision of marketing and training services, according to a tax notice sent to the company earlier this month by the Directorate General of GST Intelligence (DGGI), which is the federal entity responsible for investigating violations of goods and services taxes. 

However, investigators claim that the vendors had not provided services, and instead acted as intermediaries to funnel funds to Aviva’s agents. According to the notice quoted by Reuters, “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.”

This reportedly allowed the company to evade $5.2 million in taxes. Senior officials at the UK firm were also aware of the developments, according to Reuters. The company has refused to comment on “speculation or ongoing legal matters,” the agency noted. 

Aviva is the largest general insurer and a leading life and pension provider in the UK. The company is also the second-largest general insurer in Canada. In June, it announced plans to double its agency base across India.

READ MORE: Indian regulator alerts investors over Adani saga

The Aviva case is a part of a larger investigation by Indian tax authorities involving more than a dozen insurance companies and the alleged evasion of $610 million in unpaid taxes, interest, and penalties. Last year, authorities sent Bajaj Allianz Life Insurance and ICICI Prudential Life Insurance – two prominent domestic players in the insurance market – show-cause notices for allegedly evading taxes since 2017.

The probe, which started in 2022, reportedly pertains to the Indian insurance industry’s practice of accounting for all sales commissions above the regulator-prescribed limit as advertising and marketing costs and then claiming tax credit.