  Local perturbations of crystal and magnetic structure of $\gamma$-iron near
carbon interstitial impurity is investigated by {\it ab initio} electronic
structure calculations. It is shown that the carbon impurity creates locally a
region of ferromagnetic ordering with substantial tetragonal distortions.
Exchange integrals and solution enthalpy are calculated, the latter being in a
very good agreement with experimental data. Effect of the local distortions on
the carbon-carbon interactions in $\gamma$-iron is discussed.
