This article intends to highlight the broad conceptual issues relating to taxation of carbon credits in India. It begins with a note that climate change is a reality and the global community is facing the brunt. Section 1 succinctly gives a vivid description of climate change from its origin, the need for this, important conferences and meets that have contributed to the birth of this new merchandizing concept of carbon credit. Section 2 briefly describes the scheme of Clean Development Mechanism (CDM) under Kyoto Protocol as it involves developed and underdeveloped economies of the world without prejudicing any interest. Section 3 analyses taxation aspect of income generated from the sale of the Certifi ed Emission Reductions (CERs) under Kyoto Protocol. The factor of residence becomes important for any tax structure; therefore, the authors had made an assumption that such residence is in India and all the profits and gains arise out of activities in India. Section 4 concludes that ‘carbon credits’ per se are not taxable in India. It further makes a remark on economic impact of any such tax structure on carbon credits.
Intertax