I-T Dept Challenges Jane Street's Rs 20,000 Cr F&O Gains, Cites Treaty Abuse

• The Income Tax Department issued a draft notice to Jane Street, questioning its claim for Singapore treaty benefits on Rs 20,000 crore in derivative market gains over the past 4-5 years.
• Jane Street faces potential tax liability of around Rs 7,000 crore if treaty benefits are denied, adding to pressure from a Rs 4,843-crore SEBI impounding order for alleged market manipulation.
• The I-T department alleges Jane Street shifted its base from Hong Kong to Singapore post-FY20 solely to avail tax exemptions, claiming its Singapore office lacks commercial substance and traders operate from Hong Kong.
• Jane Street defends its move to Singapore as a force majeure event due to strict COVID-19 lockdowns in Hong Kong, stating traders found it difficult to operate.
• Tax experts highlight the significant difference in tax treatment between India-Singapore and India-Hong Kong DTAAs for derivative gains, with the Singapore treaty offering zero-tax outcomes for such profits.