Tax authorities are conducting an investigation into Jane Street’s potential tax treaty violations, specifically examining if the firm routed profits through Singapore entities for its Indian market derivative trades, according to three informed sources, quoted by Reuters (anonymously).
Income tax officials have been conducting searches at the American trading firm’s Indian offices since last week. A government official familiar with the situation indicated that Jane Street personnel were not being cooperative.
The tax inquiry follows the Securities and Exchange Board of India’s (SEBI) temporary restriction, where the regulator publicly claimed the firm had manipulated stock indices through derivatives positions.
While Jane Street has contested Sebi’s claims, they have remained silent regarding the tax investigation.
The investigation reportedly centres on whether Jane Street circumvented the General Anti-Avoidance Rules (GAAR) by utilising the Double Taxation Avoidance Agreement (DTAA) between India and Singapore to avoid taxes on substantial profits from Indian derivative trading, according to all three sources.
The DTAA aims to prevent dual taxation for residents, whilst GAAR enables countries to refuse tax benefits used solely for avoidance purposes.
Indian tax officials are examining whether Jane Street deliberately recorded higher profits on Indian market derivatives positions through Singapore entities to reduce tax liability, confirmed all three Reuters informed sources.
SEBI’s July 4 ban order revealed Jane Street’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 39.35 billion Indian rupees ($448.23 million), Jane Street Singapore gained 256 billion rupees ($2.92 billion), and Jane Street Asia Trading (Hong Kong) recorded 69.30 billion Indian rupees ($789.39 million).
Should the tax investigation reveal rule violations, Jane Street might face tax demands, according to the third source.
Tax authorities are attempting to examine Jane Street’s overseas-maintained accounts.
The second source indicated that SEBI provided the tax department with financial details of the four Jane Street group entities mentioned in their orders.
