Tax dept asks foreign PE firms to disclose “carry” details

The transfer pricing (TP) wing of the I-T department is asking foreign private equity (PE) houses and their local arms to disclose the share of profits (“carry”), to verify that the mark-ups charged by the Indian firm are in line with the ones that would be struck by two unrelated entities for a similar transaction. As higher the mark-up higher the profit and vice versa. The tax department at present is asking for the carry information when the fund's local advisory arm is entering into a new advance price agreements (APAs) or an old agreement is being renewed as carry information is highly confidential.