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Economic Times
11-07-2025
- 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
11-07-2025
- 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
11-07-2025
- 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.
Time of India
08-06-2025
- Business
- Time of India
Banks' proposal for tax relief on NPA interest under review
New Delhi: The government is reviewing a proposal from banks to exempt the interest earned on non-performing assets by amending the income tax law to align the definition of NPAs with that of the banking sector regulator, the Reserve Bank of India . The RBI classifies a loan as an NPA if the interest or principal remains overdue for more than 90 days, while the income-tax act classifies a loan NPA if this period is more than six months. "In May, these suggestions were made to the Department of Financial Services, which in turn flagged the issue with the revenue department in the finance ministry," said an official requesting anonymity, adding that separately a representation has also been made by the Indian Banks' Association , or IBA. A committee with tax officials, representatives from the industry and the Institute of Chartered Accountants of India has been tasked with the review of the draft income-tax law and is examining the issue, said another government official. Live Events The section 43D under the income tax act specifically provides for taxation of interest income from non-performing loans. It is taxed either on a realisation basis or as a credit to the statement of profit and loss, whichever is earlier. Lenders have also sought an increase in deduction for the provision made for NPA to up to 15% of the gross income from 8.5%. Under section 36(1)(viia) of the Income Tax Act, 1961, banks and financial institutions are allowed a deduction in respect of the provisions made for non-performing assets. The provision is also applicable to NBFCs and housing finance companies. The industry had in the past flagged the issue citing numerous litigation at various courts. If the government agrees to the proposed changes, banks' bottom lines will get a boost. As per current data, gross non-performing assets, or GNPAs, of scheduled commercial banks, or SCBs, stood at Rs 4.16 lakh crore as of Q4 FY25. "The NPA recognition principles are not clearly aligned, leading to instances where the tax department seeks to tax notional interest income on NPAs, even though such interest is not recognized in books due to RBI norms," Sandeep Sehgal, Partner- Tax, AKM Global, a tax and consulting firm said. This puts unjust tax liability on unrealised income as banks and financial institutions are required to pay tax on interest income beyond 90 days, Sehgal added.
Mint
04-06-2025
- Business
- Mint
Companies have to file annual returns, disclosures for FY25 in new web-based forms
New Delhi: Businesses will have to make their most important statutory filings, especially annual returns, financial statements and cost audit reports, in the revamped and web-based forms in the government's portal from 14 July. The revamped version of the ministry of corporate affairs portal—MCA21—is highly tech-driven and AI-enabled to improve the security of filings and to enable real-time verification of the data being entered. These 38 key statutory forms, including 13 annual filing forms and six audit forms, are the final set of company forms to be migrated to the new format, said an official announcement. This will complete the revamp of the MCA21 portal. These were not included among those migrated last year as the government did not want the annual return filing cycle to be disrupted by technical glitches during the transition. India has over 1.8 million active companies. Making the forms available in July gives businesses ample time to familiarise with the new format this year. Companies have six months from the end of a financial year to hold their annual general meeting and then one month to file their financial statements and 60 days from the AGM to file annual returns. The web-based forms replace PDF forms for improved user experience and more efficient regulatory monitoring of businesses. The rebuilt filing portal allows authorities to detect financial stress and governance lapses in companies at an early stage and take remedial action. Also, defaults in compliance with certain statutory obligations may be automatically flagged to companies for rectification. Forms for reporting appointment, removal and resignation of statutory auditors, disclosure of related parties, corporate social responsibility and investor complaints are among the 38 now being migrated to the new version. Since the revamped MCA21 portal (version three or V3) allows filling the forms directly online, the transition to it is expected to bring considerable advantages for both businesses and professionals by way of improved user interface, more accuracy, and enhanced data security, said Sandeep Sehgal, partner-tax at AKM Global, a tax and consulting firm. 'Complete transition to the V3 portal will also help streamline compliance processes, making regulatory filings faster and more efficient,' Sehgal said. 'Once the complete integration of MCA forms is completed on one platform, it will further strengthen the regulatory ecosystem by enabling better data integration and thus helping build a more connected and responsive compliance environment.' Two-factor authentication required in the new forms makes it impossible to file a company document without the registered user coming to know about it, helping prevent fraud, Mint reported on 1 July last year. The ministry has also replaced the requirement of obtaining the Registrar of Companies (RoC) approvals for several corporate disclosures with just an online acknowledgement of the filing to be considered compliant. The upgraded system enables RoCs to conduct data analytics efficiently and detect compliance breaches.
