Can Jane Street be taxed in India? Authorities looking into the issue
Firm’s profits booked under India-Singapore DTAA, can GAAR provisions be invoked is the question
- Jul 10, 2025,
- Updated Jul 10, 2025 11:59 AM IST
Tax authorities are understood to be looking into global proprietary trading firm Jane Street’s practices to assess whether there are any income tax implications and if provisions under the General Anti Avoidance Rules (GAAR) can kick in on its profits.
The trading firm has been barred by the Securities and Exchange Board of India (Sebi) through an order on July 3 from the Indian trading markets. In its order, Sebi has also said that “unlawful gains” of Rs 4,843.57 crore should be impounded.
One of the issues is that Jane Street’s profits were largely booked in Singapore, which benefits from the India-Singapore Double Taxation Avoidance Agreement (DTAA) under which derivative gains are not taxable in Singapore.
According to sources, the tax authorities are now looking into the firm’s transactions and whether these can be taxed India using the GAAR framework.
“Under GAAR, any setup that lacks ‘commercial substance’ or exists mainly to evade taxes can be reversed by tax department. Notably, If GAAR is invoked, profits earned by overseas entities can also be reattributed to the Indian entities, which can taxed at rates up to 38.22%,” said Sandeep Sehgal, Partner-Tax, AKM Global, a tax and consulting firm.
Jane Street’s group structure involved four core entities—two Indian entities (JSI Investments and JSI2 Investments) and two foreign portfolio investors based in Singapore and Hong Kong. The Indian entities engaged in intra-day trades on the cash and futures segments of Indian stock exchanges, while the offshore FPIs booked significant gains through index option trades.
“Though the arrangement was done to benefit from the inefficiencies in the system, certainly, the Indian tax department is likely to tax profits made by Jane Street group from Indian stock market over the examination period,” Sehgal said, noting that Jane Street’s use of Indian entities to route intraday trades while booking large profits offshore, especially in Singapore, raises significant red flags under India’s GAAR framework.
Tax authorities are understood to be looking into global proprietary trading firm Jane Street’s practices to assess whether there are any income tax implications and if provisions under the General Anti Avoidance Rules (GAAR) can kick in on its profits.
The trading firm has been barred by the Securities and Exchange Board of India (Sebi) through an order on July 3 from the Indian trading markets. In its order, Sebi has also said that “unlawful gains” of Rs 4,843.57 crore should be impounded.
One of the issues is that Jane Street’s profits were largely booked in Singapore, which benefits from the India-Singapore Double Taxation Avoidance Agreement (DTAA) under which derivative gains are not taxable in Singapore.
According to sources, the tax authorities are now looking into the firm’s transactions and whether these can be taxed India using the GAAR framework.
“Under GAAR, any setup that lacks ‘commercial substance’ or exists mainly to evade taxes can be reversed by tax department. Notably, If GAAR is invoked, profits earned by overseas entities can also be reattributed to the Indian entities, which can taxed at rates up to 38.22%,” said Sandeep Sehgal, Partner-Tax, AKM Global, a tax and consulting firm.
Jane Street’s group structure involved four core entities—two Indian entities (JSI Investments and JSI2 Investments) and two foreign portfolio investors based in Singapore and Hong Kong. The Indian entities engaged in intra-day trades on the cash and futures segments of Indian stock exchanges, while the offshore FPIs booked significant gains through index option trades.
“Though the arrangement was done to benefit from the inefficiencies in the system, certainly, the Indian tax department is likely to tax profits made by Jane Street group from Indian stock market over the examination period,” Sehgal said, noting that Jane Street’s use of Indian entities to route intraday trades while booking large profits offshore, especially in Singapore, raises significant red flags under India’s GAAR framework.