Our Bureau
Mumbai
The troubles for Jane Street don’t seem to end as the trading firm from the United States is being suspected for treaty shopping. It is being reported that the income tax department is inquiring the global trading firm for treaty shopping on the back of the allegations on them for routing derivative trades through its entity based in Mauritius.
As per some sources, it is being purported that Jane Street was routing its derivative trades through its entity in Mauritius so that they could claim capital gains tax exemption under the tax treaty between the two countries. It was reported that the trading firm had booked several profits through Mauritius in futures and options trade while they recorded losses on their equity investments in Indian companies. Through this move the firm had zero tax liability on its overall India-linked trades.
The investigation has reopened the wounds of the offshore routing practices and the regulatory scrutiny to the use of tax treaties that foreign portfolio investors that function in India have exploited for their advantage.
There have been reports that suggest that Income Tax Department believes that the treaty benefits that Jane Street used were wrongly claimed. They believe that the profits from the derivatives segment are taxable in India. The department has claimed that the Wall Street firm has violated several Indian norms.
According to several sources it is to be believed that the department faced some challenges in their verification proceedings against the firm. It is being reported that Jane Street is not cooperating with Indian tax authorities and has blocked access to their servers and accounting books.
