On July 31, 2025, the Income Tax Department conducted survey operations at the Mumbai offices of US-based trading giant Jane Street and its Indian partner Nuvama Wealth (formerly Edelweiss Broking), in connection with SEBI’s earlier findings of possible market manipulation in Bank Nifty options trading.
The investigation aims to scrutinize suspected tax and regulatory violations.
In a major development tied to one of the largest alleged trading manipulation cases in India, the Income Tax Department on Wednesday launched survey operations on the premises of Jane Street and its Indian partner Nuvama Wealth and Investment Ltd in Mumbai. The operation is part of a coordinated probe into suspected tax irregularities and financial misconduct, stemming from SEBI’s earlier action against the global proprietary trading firm.
The searches, which began early in the day, focused on collecting electronic data, financial statements, communications, and trading records from both entities.
Background: SEBI Action on Jane Street
The Income Tax survey comes weeks after the Securities and Exchange Board of India (SEBI), on July 3, 2025, imposed a trading ban on Jane Street and its affiliated entities. The regulator alleged that the firm used complex Bank Nifty derivative strategies to manipulate the market and gain unfair profits exceeding ₹36,000 crore.
Jane Street was accused of executing a pattern where it bought underlying stocks in the Nifty Bank Index while simultaneously shorting options to distort the market dynamics. According to SEBI, these trades lacked economic rationale and were “abusive to the market”.
Following this, SEBI directed Jane Street to deposit ₹4,843 crore in an escrow account by July 14, as a condition for revoking the trading ban. Jane Street complied, and was allowed to resume trading on July 21.
What is the Income Tax Department Investigating?
The ongoing survey by the Income Tax Department is focused on:
- Examining whether Jane Street routed profits through India using structured trades without paying due taxes.
- Verifying Nuvama’s role in executing and facilitating trades for Jane Street, possibly aiding in creating tax-efficient or evasive structures.
- Probing the compliance status of gains made by Jane Street and its Indian intermediaries under General Anti-Avoidance Rules (GAAR).
- Reviewing whether Transfer Pricing norms or Permanent Establishment (PE) thresholds were bypassed.
The Income Tax Department is exercising powers under Section 133A of the Income Tax Act, which allows authorities to enter business premises for non-intrusive surveys and verification of accounts.
About the Companies Involved
Jane Street Group LLC is a New York-based proprietary trading firm known for its algorithmic and high-frequency trading strategies. It has a global presence across major financial markets.
Nuvama Wealth, formerly known as Edelweiss Broking, is a leading financial services firm in India that provides trading and investment solutions. It served as the custodian and on-ground partner for Jane Street’s trades in Indian markets.
Market Impact and Stock Movement
Following reports of the Income Tax survey, Nuvama’s shares declined by nearly 4% on the National Stock Exchange (NSE), closing at around ₹7,139.50. Analysts attribute the fall to investor concerns over the potential legal and financial exposure of the company.
Timeline of Events
| Date | Event |
|---|---|
| July 3, 2025 | SEBI bans Jane Street from trading over market manipulation allegations |
| July 14, 2025 | Jane Street deposits ₹4,843 crore in SEBI-mandated escrow account |
| July 21, 2025 | SEBI allows Jane Street to resume trading in Indian markets |
| July 31, 2025 | Income Tax Department initiates survey operations at Nuvama and Jane Street offices in Mumbai |
Legal and Regulatory Ramifications
Experts say the intersection of tax and securities law in this case may set important precedents:
- If Jane Street is found to have avoided establishing a taxable presence, it may face retrospective tax demands.
- Nuvama could face GAAR scrutiny for potentially enabling an arrangement that lacks commercial substance.
- SEBI may re-examine its approval of Jane Street’s re-entry into trading based on the outcome of tax probes.
- The Finance Ministry may also initiate inter-agency collaboration if foreign exchange or FEMA violations are discovered.
Industry Reactions
Financial industry insiders say the development underscores India’s growing regulatory coordination and signals a tough stance on offshore entities engaging in aggressive tax planning.
A former SEBI official commented anonymously, saying,
“What Jane Street allegedly did was exploit market mechanisms using sheer financial muscle. But if tax avoidance is layered on top, it becomes a serious compliance issue.”
What Happens Next?
While no formal seizure or arrests have been reported yet, sources suggest:
- If irregularities are confirmed, penalties, back-tax demands, or even prosecution under tax evasion laws may follow.
- Nuvama’s books for the last three to five years may be re-opened under scrutiny.
- SEBI’s ongoing surveillance could lead to additional disclosures or penalties.
