Latest news with #GeneralAnti-AvoidanceRules
Economic Times
a day ago
- Business
- Economic Times
Income Tax department mulls probe into Jane Street after SEBI allegations of market manipulation
Following SEBI's allegations of market manipulation against Jane Street, the Income Tax department is considering a probe into potential violations. The investigation will focus on General Anti-Avoidance Rules (GAAR) and permanent establishment norms, examining the firm's structure involving Indian and offshore entities. Authorities suspect profits booked in Singapore may be reattributed to India, leading to significant tax implications. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Mumbai | Delhi: US-headquartered proprietary trading firm Jane Street , barred by the Securities and Exchange Board of India ( Sebi ) over allegations of market manipulation , could also come under the income tax scanner. The department is considering a probe into potential violations of provisions related to the General Anti-Avoidance Rules (GAAR) framework and permanent establishment norms, people familiar with the matter to Sebi's findings, Jane Street's Indian entity engaged in intraday trades in the cash segment, while its offshore entities, based in Singapore and Hong Kong, booked substantial profits through index option trades. This arrangement has raised concerns about the possible breach of certain tax provisions, said the people provisions pertain to the creation of permanent establishment, besides GAAR, according to the people. I-T department and Sebi officials have held informal discussions on the issue, they be clear, the income tax department has not sent any formal communication or notice to Jane Street on the issue so Street didn't respond to queries."At this point in time, Sebi's interim order is being studied to look specifically for income tax violations," said an official, adding that the closer examination of documents and accounts will take time. "In the course of the examination, if any explanation is required from the entities, they would be communicated about the same."Tax experts are of the view that Jane Street's structure may lack commercial substance, which means that GAAR provisions would apply. These allow the tax department to reattribute profits earned by overseas entities to Indian ones, subjecting them to taxation at rates up to 38.22%. This could have significant implications for Jane Street's tax liabilities in Street's group structure involved four core entities, said Sandeep Sehgal, partner, tax, AKM Global, a tax and consulting firm. Two are Indian--JSI Investments and JSI2 Investments. The others are foreign portfolio investors (FPIs) based in Singapore and Hong Kong, he said."The Indian entities were engaged in intraday trades on the cash and futures segments of Indian stock exchanges, while the offshore FPIs booked significant gains through index option trades," he said. "Notably, the profits were largely recorded in Singapore, benefiting from the India-Singapore tax treaty where derivatives gains are not taxable in Singapore... 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."Under GAAR, any setup that lacks "commercial substance" or exists mainly to evade taxes can be reversed by the tax department.
Time of India
a day ago
- Business
- Time of India
Income Tax department mulls probe into Jane Street after SEBI allegations of market manipulation
Mumbai | Delhi: US-headquartered proprietary trading firm Jane Street , barred by the Securities and Exchange Board of India ( Sebi ) over allegations of market manipulation , could also come under the income tax scanner. The department is considering a probe into potential violations of provisions related to the General Anti-Avoidance Rules (GAAR) framework and permanent establishment norms, people familiar with the matter said. According to Sebi's findings, Jane Street's Indian entity engaged in intraday trades in the cash segment, while its offshore entities, based in Singapore and Hong Kong, booked substantial profits through index option trades. This arrangement has raised concerns about the possible breach of certain tax provisions, said the people cited. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like If you have a mouse, this game will keep you up all night. No Install. Play for free. Navy Quest Undo Agencies Significant Implications for Tax Liabilities These provisions pertain to the creation of permanent establishment, besides GAAR, according to the people. I-T department and Sebi officials have held informal discussions on the issue, they added. To be clear, the income tax department has not sent any formal communication or notice to Jane Street on the issue so far. Live Events Jane Street didn't respond to queries. "At this point in time, Sebi's interim order is being studied to look specifically for income tax violations," said an official, adding that the closer examination of documents and accounts will take time. "In the course of the examination, if any explanation is required from the entities, they would be communicated about the same." Tax experts are of the view that Jane Street's structure may lack commercial substance, which means that GAAR provisions would apply. These allow the tax department to reattribute profits earned by overseas entities to Indian ones, subjecting them to taxation at rates up to 38.22%. This could have significant implications for Jane Street's tax liabilities in India. Jane Street's group structure involved four core entities, said Sandeep Sehgal, partner, tax, AKM Global, a tax and consulting firm. Two are Indian--JSI Investments and JSI2 Investments. The others are foreign portfolio investors (FPIs) based in Singapore and Hong Kong, he said. "The Indian entities were engaged in intraday trades on the cash and futures segments of Indian stock exchanges, while the offshore FPIs booked significant gains through index option trades," he said. "Notably, the profits were largely recorded in Singapore, benefiting from the India-Singapore tax treaty where derivatives gains are not taxable in Singapore... 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." Under GAAR, any setup that lacks "commercial substance" or exists mainly to evade taxes can be reversed by the tax department.
Time of India
a day ago
- Business
- Time of India
Sebi Step may Prove Taxing for Jane Street
Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Popular in Epaper US-headquartered proprietary trading firm Jane Street , barred by the Securities and Exchange Board of India (Sebi) over allegations of market manipulation, could also come under the income tax scanner. The department is considering a probe into potential violations of provisions related to the General Anti-Avoidance Rules (GAAR) framework and permanent establishment norms, people familiar with the matter to Sebi's findings, Jane Street's Indian entity engaged in intraday trades in the cash segment, while its offshore entities, based in Singapore and Hong Kong, booked substantial profits through index option trades. This arrangement has raised concerns about the possible breach of certain tax provisions, said the people provisions pertain to the creation of permanent establishment, besides GAAR, according to the people. I-T department and Sebi officials have held informal discussions on the issue, they be clear, the income tax department has not sent any formal communication or notice to Jane Street on the issue so Street didn't respond to queries.'At this point in time, Sebi's interim order is being studied to look specifically for income tax violations,' said an official, adding that the closer examination of documents and accounts will take time. 'In the course of the examination, if any explanation is required from the entities, they would be communicated about the same.'Tax experts are of the view that Jane Street's structure may lack commercial substance, which means that GAAR provisions would apply. These allow the tax department to reattribute profits earned by overseas entities to Indian ones, subjecting them to taxation at rates up to 38.22%. This could have significant implications for Jane Street's tax liabilities in Street's group structure involved four core entities, said Sandeep Sehgal, partner, tax, AKM Global, a tax and consulting firm. Two are Indian--JSI Investments and JSI2 Investments. The others are foreign portfolio investors (FPIs) based in Singapore and Hong Kong, he said.'The Indian entities were engaged in intraday trades on the cash and futures segments of Indian stock exchanges, while the offshore FPIs booked significant gains through index option trades,' he said. 'Notably, the profits were largely recorded in Singapore, benefiting from the India-Singapore tax treaty where derivatives gains are not taxable in Singapore… 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.'Under GAAR, any setup that lacks 'commercial substance' or exists mainly to evade taxes can be reversed by the tax department.
News18
6 days ago
- Business
- News18
After Rs 36,500 Cr Jane Street Scam Saga, Can SEBI Plug The Gaps In Derivatives Market?
Jane Street, a US-based algo trading company, was alleged by the Securities Exchange Board of India (SEBI) in its 115-page report for market manipulation and misleading investors. The company was alleged to make profits in billions through unethical strategies. SEBI has now barred Jane Street from accessing the Indian stock market and ordered to pay Rs 4,840 crore in alleged unlawful gains. Gaurav Goel, Founder and Director at Fynocrat Technologies told The Economic Times that the damage isn't just financial – it erodes faith in the system. 'This kind of manipulation, if proven true, not only distorts the market but also harms retail investors who trade with trust and limited capital," he added. Goel told ET that several regulatory gaps need to be filled in. He said 'manipulators often trade in both stock and options markets to create fake price moves. Sebi should build systems that track both markets together and raise alerts when something looks suspicious." Dinesh Thakkar, Managing Director, Chairman and the Founder of Angel One while sharing his PoV on the future of India's proprietary trading, said India's market opportunity is ????????????????????????????????????????, ???????????? ???????????????????????????????? ???????????? ???????????????????????????????????? ???????????? ???????????????????????????????????? ???????? ???????????? ???????????? ????????????????. He said that India's macroeconomic foundation remains solid. ???????????????????????????????????? ????????????????????????????????????, ???????????????????????????????????????? ????????????????????????????????????????????????, ???????????????????????? ???????????????????????????????? ????????????????????????????????????????????, ???????????????????????? ???????????????????????????????? ???????????????????????????? ???????????????????? ???????????? ???????????? ???????????????????????????????????? continue to support high liquidity and sustained market participation Siddhart Bhamre, head of institutional research at Asit C Mehta said Jane Street is one of the largest traders contributing to India markets. He added that when big players are banned for wrongdoing, others become cautious and reduce activity, leading to lower volumes. The impact may extend beyond SEBI's jurisdiction, with tax authorities expected to examine Jane Street's structure under India's General Anti-Avoidance Rules (GAAR). A large chunk of profits was reportedly routed through its Singapore-based FPI arm, leveraging treaty-based tax benefits, while Indian entities allegedly carried out intraday trades—something FPIs are not allowed to do. 'Considering the observations in the interim order, GAAR could potentially be applied to shift profits to entities liable to pay tax in India," said Harshal Bhuta, partner at PR Bhuta & Co, in a statement to The Economic Times. Jane Street Fraud Saga: Full Explained The regulatory action comes after an extensive investigation into alleged manipulation of the Indian stock market through index derivatives, particularly Bank Nifty options, which earned the company massive profits of over Rs 36,500 crore between January 2023 and March 2025. Advertisement In India, it operated through four firms — JSI Investments Pvt Ltd, JSI2 Investments Pvt Ltd, Jane Street Singapore Pte Ltd, and Jane Street Asia Trading Ltd. How Did Jane Street Earn Rs 36,500 Crore By Allegedly Tricking Indian Stock Markets? Between January 2023 and March 2025, Jane Street entities made over Rs 43,289 crore in profits from index options, particularly Bank Nifty (BANKNIFTY) using various strategies that allegedly manipulated markets. These profits were partly offset by losses in other segments like stock futures and cash equity, resulting in a net gain of Rs 36,502 crore. In a 105-page order, Sebi highlighted two key manipulative strategies — 'Intraday Index Manipulation Strategy' and 'Extended Marking the Close Strategy'. Read Those Market Manipulation Strategies : Explained: What Is Jane Street, How It Earned Rs 36,500 Cr From F&O Trades In India, Why Has Sebi Banned It? Sebi noted the following: A staggering Rs 17,319 crore was earned from BANKNIFTY options alone. advetisement Profits were disproportionately high on expiry days, when options contracts expire and price influence can be most potent. Trades were concentrated in short bursts, often aligned with expiry timings. 'JS Group made a total profit of Rs 36,502.12 crores across all segments," Sebi said in the order. SEBI has accused Jane Street of: Violating the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations Misleading market participants, especially retail traders who rely on index movements
