After Sebi's ban, Jane Street may face a probe by Income Tax Department: Report

SEBI had barred the US-based Jane Street over charges of market manipulation

Days after the Securities and Exchange Board of India barred US-based trading giant Jane Street over market manipulations, there are reports that the Income Tax department may also launch a probe in the issue.

An Economic Times report said that the I-T officials may see whether Jane Street has violated any Indian tax provisions or not. The ET report further said that the violations may be linked to the framework under the General Anti-Avoidance Rules and norms related to permanent establishment.

SEBI has temporarily banned Jane Street from the Indian market over the allegations regarding misleading the investors via index manipulation. However, the US-headquartered trading giant has disputed the claims.

The ET report further added that the booking of significant profits via index option trades by the offshore entities of Jane Street have raised concerns regarding potential violation of the Indian tax norms.

While there has been a discussion between SEBI and I-T officials, no formal notice has been issued to Jane Street, the report added.

The ET report also said that the experts believe that the American trading firm’s structure may lack commercial substance. This may potentially trigger the application of GAAR norms.

These rules empower the Indian tax department to reattribute profits earned by foreign entities to their Indian counterparts, making them liable for taxation at rates of up to 38.22%. This could have major implications for Jane Street's tax obligations in India.