Green Accounting Standards and Taxability of Carbon Credit Certificate

Abstract

In Green Accounting, unlike developed countries, Indian companies are lagging behind in booking of costs on envirnoment under appropriate heads in in absence of Accounting Standards. Moreover, there is insufficient Disclosures on Envirnoment in Annual Accounts. Except few elite companies, Indian corporates are shying away from disclosures on reduction of carbon emission. On the contrary, in USA and in EU including U.K. have sufficient Accounting Standards under GAAP and IFRS coupled with Disclosure Norms of SEC and EU Securities Market Regulation. Carbon Credits is a financial offer in form of a certificate to an emission prone company for reduction of the emission of Green House Gases and also carbon dioxide. This certificate is known as Certified Emission Reduction (CER) certificate. This certificate is tradable in MCX in India and European Climate Exchange, Chicago Climate Exchange, NASDAQ OMX etc. The aspects of Taxation of Carbon Credit under GST and Income Tax have been debated here.