IT Department investigates Jane Street for sidestepping laws
IT Department investigates Jane Street for sidestepping laws
It is examining whether the American trading firm took advantage of the GAAR and the DTAA rules
The Income Tax Department is probing Jane Street's potential tax treaty violations to examine if it routed profits through Singapore entities for its Indian market derivative trades.
The inquiry follows the earlier action by the Securities and Exchange Board of India (SEBI) against the American trading firm for alleged market manipulation. Officials are investigating whether the firm circumvented tax laws by leveraging the India-Singapore Double Taxation Avoidance Agreement. (DTAA).
SEBI provided the tax department with financial details of the four Jane Street group entities mentioned in their orders.
The regulator's recent ban order against Jane Street revealed that the firm’s Indian trading earnings exceeded $4 billion from January 2023 to May 2025.
The order showed profit distribution across entities. JSI Investments and JSI2 Investments (India) earned Rs.39.35 billion ($448.23 million), Jane Street Singapore gained Rs.256 billion ($2.92 billion), and Jane Street Asia Trading (Hong Kong) recorded Rs.69.30 billion ($789.39 million).
Meanwhile, Jane Street refuted the market regulator’s claims.
The probe centres on whether Jane Street circumvented the General Anti-Avoidance Rules (GAAR) by utilising the DTAA) between India and Singapore to avoid taxes on substantial profits.
(While the DTAA prevents dual taxation for residents, GAAR enables countries to refuse tax benefits used solely for avoidance purposes).
Indian tax officials are attempting to examine Jane Street's overseas accounts to ascertain if it deliberately recorded higher profits on Indian market derivatives through Singapore entities to reduce tax liability. In case of rule violations, Jane Street will face tax demands.
