India's Tax Authorities Target Jane Street's Multi-Billion Dollar Profits
In a significant development, Indian tax officials have reportedly recommended denying Jane Street Group LLC the benefits of the India-Singapore tax treaty. Furthermore, they have proposed that the firm's substantial profits be taxed as capital gains. This recommendation comes amidst ongoing legal challenges involving the US-based trading giant and India's markets regulator, the Securities and Exchange Board of India (SEBI).
Investigation Unit's Key Recommendations
The investigation wing of the Income Tax Department has specifically advised against invoking the General Anti-Avoidance Rules (GAAR) for Jane Street. Instead, they propose that the profits generated by the company within India should be classified and taxed as capital gains. This move follows a detailed probe into Jane Street's financial activities, which was initiated after SEBI's order dated 3 July 2025.
SEBI's Allegations of Market Manipulation
SEBI has accused Jane Street and its affiliated entities in India, Hong Kong, and Singapore of manipulating the Nifty and Bank Nifty indices. The regulator alleges that these actions led to "illegal" profits of approximately ₹36,500 crore. According to SEBI, Jane Street engaged in a sophisticated strategy: purchasing large quantities of Bank Nifty index constituents in both cash and futures markets to artificially inflate the index during morning trades, while simultaneously building substantial short positions in index options that were exercised or expired later in the day.
Legal Proceedings and Financial Impact
Following the initial ban on 3 July 2025, Jane Street was permitted to resume trading after depositing ₹4,840 crore into an escrow account. The firm has since sought extensions to rebut the allegations and, in September 2025, appealed SEBI's order in a Mumbai appeals court. The case remains pending. Notably, Jane Street reported nearly $7 billion in trading revenue during the third quarter, with profits exceeding $4 billion from trading stocks, futures, and options in India between January 2023 and March 2025, as per SEBI's findings.
Background and Global Presence
Established in 2000, Jane Street Group is a prominent global proprietary trading firm in the financial services industry. The company, headquartered in New York, expanded its operations to India following the COVID-19 pandemic, engaging in equities, stock futures, and index options trading. With over 3,000 employees across five global offices, the firm's activities in India have now come under intense scrutiny from both regulatory and tax authorities.
The recommendations by Indian tax officials mark a critical juncture in this high-profile case, potentially setting a precedent for how foreign trading firms are taxed and regulated in India's financial markets.
