India's tax department investigating Jane Street over possible tax treaty misuse, sources say

India's tax authorities are investigating whether Jane Street violated tax laws by booking profits via its Singapore entities on its derivative trades in the Indian market, three sources briefed on the matter said.

Searches at the U.S. trading firm's India offices by the income tax department have been underway since last week, sources have said. A government source who was briefed on the matter later said that Jane Street staff were not cooperating.

The tax authorities' enquiries follow a temporary ban by the Securities and Exchange Board of India (SEBI), the market regulator, which publicly alleged that the firm manipulated stock indexes through its derivatives positions.

Jane Street has denied the SEBI allegations, but has not made any public comments so far on the tax investigation. The firm did not respond to a Reuters request sent to its U.S. headquarters for comment on Monday on the latest developments.

India's income tax department did not respond to Reuters request for comment.

Tax authorities are investigating whether Jane Street violated the General Anti-Avoidance Rules (GAAR) by using the Double Taxation Avoidance Agreement (DTAA) between India and Singapore to evade taxes on large profits it made on Indian derivative trades, all three sources said.

The sources declined to be named because they were not authorised to speak to the media.

The DTAA is designed to prevent residents from being taxed twice, while the GAAR gives a country the power to deny a particular tax benefit if it is being used solely for tax avoidance.

The Indian tax authorities are looking into whether Jane Street booked larger profits on its derivatives positions in the Indian market via its Singapore entities as a way to reduce the tax burden, all three sources briefed on the matter added.

SEBI's July 4 ban order showed that Jane Street made more than $4 billion trading in India from January 2023 to May 2025.

Jane Street's two India entities - JSI Investments and JSI2 Investments - made a profit of 39.35 billion Indian rupees ($448.23 million), Jane Street Singapore made a profit of 256 billion rupees ($2.92 billion) and its Hong Kong entity, Jane Street Asia Trading, made a profit of 69.30 billion Indian rupees ($789.39 million), the order showed.

If the tax department's probe shows the tax rules have been breached, Jane Street could be issued with a tax demand, the third source said.

Tax authorities are trying to access Jane Street's accounts, which are maintained overseas, they added.

The second source said SEBI had provided the tax department with the profit and loss details of four Jane Street group entities the regulator had named in its orders.

SEBI did not immediately respond to Reuters' request for comment.