UK’s Aviva conspired to dodge India compensation and tax rules, agency says
The Indian tax agency has accused British insurer Aviva of breaching local regulations on sales commissions through a scheme involving fake invoices and clandestine cash payments, according to a notice seen by Reuters.
The Directorate General of GST Intelligence’s investigation found that Aviva’s India operations paid around $26 million between 2017 and 2023 to entities that purportedly provided marketing and training services.
These vendors, however, did not perform any work and were used as fronts to funnel funds to Aviva’s agents, the notice alleged.
This scheme allowed Aviva to evade approximately $5.2 million in taxes by incorrectly claiming tax credits.
The tax notice, sent to Aviva on August 3, highlights the company’s use of fake invoices to circumvent commission caps set by Indian regulators.
The notice is part of a broader investigation into over a dozen Indian insurers accused of evading $610 million in taxes, interest, and penalties.
The 205-page report includes evidence such as emails and WhatsApp messages between Aviva executives and insurance distributors discussing ways to bypass compensation regulations.
It also features testimonies from Aviva India’s chief financial officer, Sonali Athalye, and former CEO Trevor Bull, indicating that senior management was aware of the activities.
Aviva, which operates in India through a joint venture with Dabur Invest Corp., faces approximately $11 million in penalties. The company has not yet responded to the notice but intends to rebut the allegations.
Aviva, which views India as a growth market despite its relatively small share of global insurance premiums, was found to have used “Over Ride Commissions” (ORC) to exceed regulatory commission limits.
This practice involved paying commissions over the regulatory cap and documenting them as marketing and sales promotion expenses. The company also allegedly facilitated payments using photos of 10-rupee notes to disguise cash payments to agents.
The investigation underscores the ongoing challenges regulators face in monitoring and enforcing compliance in the insurance sector, particularly regarding sales practices and tax obligations.