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On June 26, 2023, the Ministry of Environment, Forests, and Climate Change introduced the draft Green Credit Programme Implementation Rules. Shortly after, on June 28, the Ministry of Power unveiled the Carbon Credit Trading Scheme 2023. These initiatives emphasize the importance of addressing climate change and using market-based approaches to achieve emission reduction goals.
The Bureau of Energy Efficiency (BEE), under the Ministry of Power, is spearheading efforts to reduce greenhouse gas (GHG) emissions. Through the Carbon Credit Trading Scheme, each ton of carbon dioxide (CO2) reduced or avoided is assigned a value, known as a carbon credit. This creates a platform for buying, selling, and trading these credits, supporting the country’s climate goals.
Not sure how to report your carbon credits effectively and make the most of carbon credit trading scheme? Let our environmental consultants streamline your sustainability reporting for greater impact.
As industrialization grows, it's crucial for businesses to take greenhouse gas (GHG) emissions seriously and act responsibly. By participating in efforts to reduce emissions, businesses can play a key role in addressing environmental challenges.
The Carbon Credit Trading Scheme 2023 allows businesses to trade carbon credits, which represent ton of carbon or carbon dioxide reduced. These credits are awarded to businesses or countries that successfully lower their GHG emissions. They can then be traded in the international market at the current market price, making businesses an important part of global emission control efforts.
Have a look at the significant ways to generate carbon credits in India-
Under the Carbon Credit Scheme, the National Steering Committee for the Indian Carbon Market and other authorities will develop detailed procedures for its operation. These procedures will guide how the Indian Carbon Market functions according to the scheme. Below are the key elements that shall be part of these operational procedures:
Issuance Criteria
A specific criterion for issuance of carbon credit certificates.
Certificate Validity
The validity of a carbon credit certificate is defined by the National Steering Committee.
Price Determination
The price of the Carbon Credit Certificates shall also be determined.
Submission Guidelines
Must specify the list of requirements, format, and timeline for submission.
Monitoring & Reporting Rules
Rules on monitoring, reporting, and verification must be categorically mentioned.
Power Exchanges
Power exchanges will take place for the trading of carbon credit certificates.
Functioning of Power Exchanges
After getting a green signal from the Central Electricity Regulatory Commission, power exchanges become operational.
Constitution of Technical Committees
The Bureau of Energy Efficiency needs to proceed with forming numerous technical committees to address areas of carbon credit trading compliance.
Accreditation of the Carbon Verification Agency
The Bureau and the National Steering Committee must make rules for the accreditation of the carbon verification agency.
The implications of tax of carbon credits under Indian Indirect tax are as follows:
Carbon credits are considered goods under the Securities Contract (Regulation) Act.
The GST rate involving carbon credits is placed under the 18% GST bracket post.
Transactions involving the export of carbon credits are exempt from GST.
The Compliance Mechanism under Carbon Credit Trading scheme for carbon credit trading is as follows:
The governing bodies under the Carbon Credit Schemes are as follows:
The National Steering Committee will oversee the functioning of the ICM. Such as it will recommend to the Bureau for the formulation and finalization of the ICM.
The National Steering Committee will oversee the functioning of the ICM. Such as it will recommend to the Bureau for the formulation and finalization of the ICM.
It shall play the role of an administrator under the Carbon Credit Trading Scheme, such as granting Carbon Credit Certificates..
It shall play the role of an administrator under the Carbon Credit Trading Scheme, such as granting Carbon Credit Certificates.
It is a registry operator, that shall manage and operate the Indian Carbon Market (ICM), such as enabling the registration of businesses.
It is a registry operator, that shall manage and operate the Indian Carbon Market (ICM), such as enabling the registration of businesses.
It is a regulator for trading activities under the Indian Carbon Market (ICM); it takes corrective measures to prevent fraud or mistrust.
It is a regulator for trading activities under the Indian Carbon Market (ICM); it takes corrective measures to prevent fraud or mistrust.
Have a look at the features of carbon credit trading scheme 2023-
Let’s look into the difference between compliance-based Vs voluntary credit trading:
| S. No | Assest | Compliance-Based Carbon Credit Trading | Voluntary Carbon Credit Trading |
|---|---|---|---|
| 1. | Regulation | Governed by a regulatory body | Voluntary Participation |
| 2. | Emission Limits | Specific limits set for each company or business. | No imposed limits on emissions |
| 3. | Carbon Credit Purchase | Required for exceeding emission limits | Companies can voluntarily choose to buy credits |
| 4. | Selling Carbon Credits | Companies with below the emission limit can sell carbon credits | Companies can sell carbon credits if purchased |
If you are an aspiring entrepreneur, you must care about the carbon credit market because of the potentially lucrative business model as given below:
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Written by Aarya Pokharel. Last updated on Nov 11 2025, 09:47 PM
Aarya Pokharel brings 3 years of solid experience in legal research and compliance. Her expertise spans tax filing, secretarial compliances, and advisory services, with a strong focus on delivering precise legal research and strategic advisory support.
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