Tax sword hangs over PE, VC funds after tribunal ruling
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Synopsis
A week ago, the Customs, Excise & Service Tax Appellate Tribunal, Bengaluru, has ruled that the ‘carried interest’ or ‘carry’ in trade parlance, which is a fund’s share of profits from managing investors’ money is a ‘performance fee’ that would attract service tax.
Agencies
The ruling by the quasi-judicial authority is being closely tracked by the VCF world and fund advisors as fund managers are driven by the money earned from ‘carry’.
A tax sword hangs precariously over all private equity (PE) houses and venture capital funds (VCFs) in India.