Investigation Into Potential Tax Treaty Violations

Tax authorities are currently investigating Jane Street, a prominent American trading firm, for potential breaches of tax treaties. The focus is on whether the firm channeled profits through Singapore entities for its derivative trades in the Indian market, as reported by three anonymous sources to Reuters.

Uncooperative Stance and Regulatory Actions

Income tax officials have been conducting searches at Jane Street's Indian offices since last week. A government official noted the firm's lack of cooperation. This tax inquiry follows a temporary restriction by the Securities and Exchange Board of India (SEBI), which accused Jane Street of manipulating stock indices through derivatives positions.

Focus on GAAR and DTAA

The investigation centers on whether Jane Street exploited the Double Taxation Avoidance Agreement (DTAA) between India and Singapore to bypass the General Anti-Avoidance Rules (GAAR), thereby avoiding taxes on significant profits from Indian derivative trading.

Financial Details and Potential Consequences

SEBI's order revealed Jane Street's Indian trading earnings exceeded $4 billion from January 2023 to May 2025. Profits were distributed among entities in India, Singapore, and Hong Kong. If violations are confirmed, Jane Street could face substantial tax demands.