Indisputably, global warming is a looming threat to the environment caused by emission of harmful greenhouse gases (GHG) into the atmosphere. In an attempt to rein this threat, the United Nations Framework Convention on Climate Change has introduced Certified Emissions Reduction (‘CERs’) conventionally known as 'Carbon Trading'. In the said framework, trading is nothing but buying and selling the right to emit CO2 and other GHG components such as CH4, N2O and fluorinated gases. The GST law in India since large has been elusive with regard to intangibles and given that in the case of supply of CERs, there is no delivery of tangible goods, the applicability of GST on carbon credit trading has led to some warring viewpoint.

Against this backdrop, authors Sachin Kumar B P (Chief Strategic Partner, Manohar Chowdhary & Associates) and Akella A. S. Prakasa Rao (Director) infers that even if the carbon tax is an effective tool to combat climate change, it has resulted into market creation for carbon credit where developed countries entities exceeding their emission limits can buy carbon credits from those whose actual emissions are below their set limits. Accepting that exchange of carbon credits is not a charitable activity alone, and linked with execution of profitable project, the authors feel that it is here where Governments naturally proposed to tax carbon credits. Discussing the taxability under the Direct and Indirect tax in great length, the author examines whether carbon credits under Direct taxes is a revenue receipt or a capital receipt after the introduction of Section 115BBG under Income-tax Act 1961 (which was specifically introduced to mitigate the tax litigation on taxability of income from carbon credits. From a GST point, the authors explore the narrow compass of whether CER is a 'good or service' and if the same qualifies as 'money' or 'securities'. Here, considering the CBIC circular and newly introduced section 194Q vide Finance Act, 2021 to Income Tax Act, 1961, the authors extensively entertain the notion that Carbon credits are similar to Priority Sector Lending Certificates (PSLC) and Renewable Energy Certificates (RECs) which according to CBIC are ‘goods’ and if the same notion could be linked, carbon credits can be brought under the umbrella of GST. Stressing on said notion, authors anticipate that taxing the supply of CERs will put extra burden on buyers resulting into less demand of CERs which would inevitably deter the companies to make extra efforts in acquiring carbon credit by cutting on their carbon emission. Therefore, in such a situation, the authors hope that carbon credits can be treated in a similar manner as the duty credit scrips issued under FTP.

Conundrum of Taxing Carbon Credits in India

Carbon Credits:

The necessity of reducing carbon emissions was first recognized at the Kyoto Protocol of the United Nations Framework on Climate Change signed in 1997 wherein the member countries, including India, committed to limit and reduce the greenhouse gas (GHG) emissions.

There are three types of carbon credits to serve three different purposes:

Assigned Amount Units or AAU

As per Kyoto Protocol, each Annex I country is allotted a fixed amount of AAUs by the United Nations Framework Convention on Climate Change (UNFCCC). This represents the maximum GHGs the Annex I Country can emit into the atmosphere. The Annex I Country in turn will distribute AAUs to industrial organizations in its country who want to emit carbon into the atmosphere.

Emission Reduction Unit or ERU

Apart from the AAUs allotted by the UNFCCC, a developed country can set up projects that reduce carbon emission in another developed country, to earn carbon credits from UNFCCC. The carbon credits so earned are called Emission Reduction Unit or ERU. ERUs can be used by the developed country to set off against its own emissions.

Certified Emission Reduction or CER

This type of carbon credit involves the developing and least developed countries which are not parties to the carbon reduction commitment. The process of obtaining these CERs is known as Clean Development Mechanism or CDM. The projects undertaken by the developing countries which reduce carbon emission are allotted CERs by the UNFCCC. 

In India, National Clean Development Mechanism (CDM) Authority (NCDMA) is the designated national authority that evaluates and approves CDM projects. Only CERs would be relevant in Indian context.

Carbon Tax:

One of the largest financial tools to combat climate change is a carbon tax. A carbon tax is imposed by a government to put a direct price on greenhouse gas emissions produced by companies or industries. It works as economic incentive for polluters to lower emissions or switch to more efficient processes or cleaner fuels. Developed countries with emission reduction targets can simply trade in the international carbon credit market. This implies that entities of developed countries exceeding their emission limits can buy carbon credits from those whose actual emissions are below their set limits. Carbon credits can be exchanged between businesses/entities or can be bought and sold in the international market at the prevailing market price.

The exchange of carbon credits, though intended for protecting the global environment, is not a charitable activity alone. It is, perhaps, a combination of good intent combined with executing profitable projects. Quite naturally, Governments of all countries propose to tax carbon credits in their respective jurisdictions.

Other economic mechanisms such as a cap-and-trade system or emissions trading scheme (ETS) can be imposed in place of a carbon tax, where governments would cap the amount of greenhouse gas emissions released into the atmosphere every year based on carbon credits. Emitting industries and companies will have the ability to sell their extra allowances to larger polluters, creating a market for carbon. This mechanism aims to deter large emitting companies from exceeding their pre-allocated carbon budget, and reduce overall emissions as a result. 

However, these financial incentives might not be enough to deter industries to reduce carbon emissions. Many have suggested adopting a carbon border tax, which would apply a charge on imported goods produced in countries with weaker emissions regulations. A cross border carbon tax would help make industries and businesses in countries that have higher carbon prices competitive against oversea businesses. 

The threshold issue to address in the carbon credit regime is what tax consequences flow from the generation of the carbon credits themselves. Although there is a relatively healthy voluntary market at present, there is almost no formal guidance regarding the tax consequences to a taxpayer upon the issuance of carbon credits in exchange for undertaking a greenhouse gas reducing project. Without any authority to the contrary, the general rules of tax law should apply. It is a general principle of tax law that any “undeniable accessions to wealth, clearly realized” is income to a taxpayer. Carbon credits are readily tradable on a market. Currently, there are several exchanges for trading carbon credits under voluntary or state-imposed restrictions, but in the future, some federally created exchange would exist under the Cap and Trade Program. If the Waxman-Markey Bill passed in USA, it would essentially create carbon credits as a form of currency. Therefore, the moment that a taxpayer receives a carbon credit, it may immediately sell or dispose of the credit as it pleases. Consequently, the taxpayer realizes an accession to wealth. Unless some exception is created legislatively or administratively to this general rule, the taxpayer has taxable income measured by the fair market value of the credits received. This income is recognized upon the receipt of the carbon credits. It is likely that this income will be ordinary income, unless the taxpayer is deemed to exchange some capital asset (i.e. a conservation easement in real property) in exchange for the carbon credits.

Accounting practices    

The status of accounting under the different accounting frameworks is as under:

IFRS :

• No separate Standard
• IFRIC 3 Emission Rights withdrawn in 2005
• IFRIC 3 still a guiding source
• Despite the withdrawal of IFRIC 3, there remains a number of existing standards that provide authoritative guidance on relevant accounting on which companies must draw in forming their policies for carbon related transactions including IAS 2, 20, 37, 38 and 39.
• IASB Project “Pollutant pricing Mechanisms” in action

US GAAP:

• No separate standard
• In November 2010, the IASB and FASB agreed to defer joint work on their joint project on emission rights
• Two accounting practices are prevalent in US
  • Accounting under intangible asset model
  • Accounting under the inventory model

IGAAP:

• No separate standard
• Only Certified Emission Reductions (CER) will be relevant in Indian context
• In 2012, ICAI issued guidance note named “ A guidance note on Accounting for self-generated Certified Emission Reductions (CER)”, which says:
  • CERs are inventories to be accounted as per AS 2
  • Since CERs are recognized as inventories, the entity should apply AS 9 to recognize revenue in respect of sale of CERs
• GN does not apply to purchased CERs

As we can see from the above, there is no specific authoritative literature for accounting of carbon credits. This has resulted in divergent schools of thought for accounting and also taxation of the carbon credits across nations.

Taxability of Carbon Credits in India under Direct Taxes

In India, the Revenue has not been successful in taxation of carbon credits earned in India in the absence of a specific provision to that effect. How far the Revenue can achieve its goals remains a question, even after the introduction of section 115BBG under the Income tax Act 1961 (ITA). It may be noted that the taxability of the carbon credits is still a contagious issue in India. A similar matter in case of Lanco Tanjore Power Corporation Ltd.  is pending for adjudication before the Apex Court. The Apex Court is pondering the issue of taxability of the carbon credit in India as it would have a far-reaching impact on the future industries. Further, this issue could also have a bearing on India’s ‘net-zero by 2070’ pledge at Glasgow Climate Summit.

With this background, let’s proceed to understand the taxability of carbon credits in India.

Whether carbon credits are considered as capital receipt or revenue receipt?

Taxation under the ITA depends on whether the income is a revenue receipt or a capital receipt. As a general rule, revenue receipts are chargeable to tax unless specifically exempted and capital receipts are exempted from tax unless specifically held to be chargeable.

Prior to FY 2017-18, there was a lot of uncertainty on whether ‘carbon credits’ are revenue receipts or capital receipts. The Revenue treated income from carbon credits as revenue receipt[1] and sought to tax the same as business income. The taxpayers, on the other hand, succeeded in establishing that income from carbon credits are capital receipts[2]. Consequently, the Revenue has not been able to tax the income from carbon credits till date.

Key elements of section 115BBG

To address the litigation on the taxation of carbon credits in India, the Finance Act, 2017 introduced section 115BBG under the ITA “in order to bring clarity on the issue of taxation of income from transfer of carbon credits and to encourage measures to protect the environment.”

Section 115BBG of the Act reads as follows:

“(1) Where the total income of an assessee includes any income by way of transfer of carbon credits, the income-tax payable shall be the aggregate of—

1. a) the amount of income-tax calculated on the income by way of transfer of carbon credits, at the rate of ten per cent; and
2. b) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause (a).

(2) Notwithstanding anything contained in this Act, no deduction in respect of any expenditure or allowance shall be allowed to the assessee under any provision of this Act in computing his income referred to in clause (a) of sub-section (1).

Explanation - For the purposes of this section, "carbon credit" in respect of one unit shall mean reduction of one tonne of carbon dioxide emissions or emissions of its equivalent gases which is validated by the United Nations Framework on Climate Change and which can be traded in market at its prevailing market price.”

On a plain reading of section 115BBG, the following points emerge:

• This is a specific provision applicable to the taxation of income from the transfer of carbon credits. Consequently, such income from carbon credits shall not be taxed under the general provisions of the ITA.
• The said income shall be taxed at 10%.
• Though the section uses the term income, which generally means revenue less expenditure, clause 2 specifically prohibits deduction of any expenditure / allowance in calculating the tax base under this section. This implies that the rate of 10% shall be applicable on the gross receipts on the transfer of carbon credits.
• The section does not specify whether it is applicable to a resident assessee or a non-resident assessee. Consequently, it is applicable to non-resident taxpayers as well. However, in the case of non-residents, taxability arises only to the extent it is attributable to the business connection/permanent establishment in India. Tax treaty benefits would also be available.

In the case of non-resident taxpayers, the OECD Publication on Tax Treaty Issues Related to Emissions Permits/Credits[3] provides that:

• Income from carbon credits may be taxed as business profits or as capital gains.
• Business profits are taxed in the source country if the non-resident taxpayer has a permanent establishment in the source country (otherwise, in the country of residence). Further, business income must be determined as per the domestic law of the source country.

Section 115BBG was introduced to mitigate the tax litigation on taxability of income from carbon credits. Whether it has achieved the desired objective or not, is something only time will tell. As of date, all jurisprudence in the matter pertains to the years prior to the introduction of section 115BBG. Taxability under section 115BBG may be challenged on the following grounds:

• The section does not specifically categorize income from carbon credits as a capital receipt or a revenue receipt. In the absence of a clear categorization, the existing judgments in the matter, which have clearly established that income from carbon credits is a capital receipt, may still hold true.
• There is no amendment to the definition of ‘income’ under section 2(24) of the ITA. For instance, where the Revenue intended to tax the receipt of property for an inadequate consideration as income, a specific amendment was made to the definition of income. Alternatively, there is no amendment to section 28 of the ITA defining ‘Profits and gains of business or profession’. In other words, the computation mechanism under section 115BBG may fail in the absence of a charging mechanism under sections 2(24) or 28 of the ITA.
• The ICAI’s Guidance Note on Accounting for Self-generated Certified Emission Reductions (CERs)[4] issued in 2012 states that:
• CERs should be recognised in books when those are created by UNFCCC and/or unconditionally available to the generating entity.
• CERs are inventories of the generating entities as they are generated and held for the purpose of sale in ordinary course.
• Even though CERs are intangible assets those should be accounted as per AS-2 (Valuation of Inventories) at a cost or market price, whichever is lower.
• Since CERs are recognised as inventories, the generating assessee should apply AS-9 (Revenue Recognition) to recognise revenue in respect of sale of CERs.

It is likely that the Revenue may consider the ICAI’s Guidance Note to support the view that carbon credits are not capital receipts and hence should be taxable.

Conclusion under Direct Tax laws:

The fact that trading in carbon credits or CERs involves high voluminous transactions, taxability of income from carbon credits seems imminent for resident taxpayers. Litigation would arise specially in the case of non-resident taxpayers whose activities in India lead to the generation of carbon credits overseas. In such cases, the issues of creation of a business connection or permanent establishment in India would have to be examined. Further, only the profits attributable to Indian activities would be taxable in India under section 115BBG. 

Taxability of Carbon Credits under Indirect Taxes

GST was introduced in India effective 01^st July, 2017 and is basically is a consumption based tax. Going by the legislative scheme of the GST laws, GST is applicable either on goods or services or both. Thus, anything which is neither "goods" nor "services" can never be subject to levy of GST. Being so, for levying GST, the CER/Carbon Credit should be either goods or services. Section 2(52) of the Central Goods and Services Tax Act, 2017 ("CGST Act") defines the term "goods" as "goods means every kind of movable property other than money and securities but includes actionable claims, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply."

Further the term "services" has been defined as "services means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged."

From a perusal of the above definitions, it is clear that money and securities have been kept out of the scope of goods as well as services. Thus, if CERs qualify as "money" or "securities", the supply of the same will not be taxable as being out of the scope of GST laws.

Whether CERs can be service:

In the year 2010, Bangalore Chamber of Commerce and Industry (BCIC) has submitted a note to the Union Government, wherein it mentioned that carbon credits should be treated as services and taxed as such. BCIC has argued that CERs are intangible in nature and it is either exported to industrialized countries or tradable as securities on specified exchanges. Hence CERs should attract only services tax, not goods tax. The taxability of the CERs should depend on the place where they are generated and the place where they are registered. It said in case the place of generation is in India and the place of registration is outside India, they should be regarded as exported. However this recommendation may not be relevant in view of the introduction of GST in India post 2017.

Whether CERs can be money:

A reading of definition of the term "money" under Section 2 (75) of the Central Goods and Services Tax Act, 2017 ("CGST Act") makes it apparent that CERs are not money nor they are classifiable under specifically mentioned instruments therein. Moreover, use of such certificates as consideration to settle an obligation has not been recognised by Reserve Bank of India. However it is to be noted that in USA, as mentioned above if the Waxman-Markey Bill is adopted, then they will be treated as money. This classification will create confusion in the international markets.

Whether CERs can be termed as Securities:

"Securities" under GST are the same as defined in clause (h) of section 2 of the Securities Contract (Regulation) Act, 1956 ("SCRA") i.e. "Securities include-

(i) shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate.;

(ia) derivative;

(ib) units or any other instrument issued by any collective investment scheme to the investors in such schemes;

(ic) security receipt as defined in clause (zg) of section 2 of ten Securities and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;

(id) units or any other such instrument issued to the investors under any mutual fund scheme;

(ii) Government Securities;

(iia) such other instruments as may be declared by the Central Government to be securities; and

(iii) rights and interest in securities"

Carbon Credits/CERs may be treated as "Securities" as they appear to fall under the wide term, "other marketable securities of a like nature in or of any incorporated company or other body corporate". A writ petition has been filed before the Hon'ble Bombay High Court, wherein the petitioner has challenged the Circulars no. 34/8/2018 dated 01.03.2018 and 46/20/2018 dated 06.06.2018 on the ground that REC scrips qualify as securities under GST. Further, the petitioner has stated that REC scrips are alike duty credit scrips prevalent in the customs law, which are exempt under GST and the same treatment should be provided to REC Scrips.

Whether CERs can be goods:

In order to be classifiable as "goods", the following criteria must be satisfied:

(a) It must be movable,

(b) It must be marketable

(c) It must not be money or securities

The above criteria were extensively discussed by the Hon'ble Supreme Court in various cases. Some of the relevant cases are as follows:

- In Vikas Sales Corporation vs Commissioner of Commercial Taxes = [TS-5064-SC-1996-O] the Supreme Court dealt with the issue of taxability of "replenishment licenses or R.E.P. licences" issued under the EXIM policy to provide to the registered exporters the facility of importing the essential inputs required for the manufacture of the products exported. It was held that the license is not only a beneficial interest in respect of a movable property not in possession of the person but is itself a valuable right which is freely transferable. The import license, therefore, must be treated as merchandise and clearly falls within the definition of "goods".

- Tata Consultancy Services vs. State of Andhra Pradesh = [TS-5018-SC-2004-O]. The Hon'ble Supreme held that, ""goods" may be tangible property or an intangible one. It would become goods provided it has the attributes thereof having regard to (a) its utility; (b) capable of being bought and sold and (c) capable of being transmitted, transferred, delivered, stored and possessed."

- Yash Overseas vs. Commissioner of Sales Tax and Ors. = 2008-TIOL-97-SC-CT, the Apex Court held that DEPB is identical to REP licenses and qualify as goods on the basis that it is freely marketable and have an intrinsic value.

- In Union of India and Ors. v. Sonic Electrochem (P) Ltd. and Anr. = 2002-TIOL-212-SC-CX, the Supreme Court dealt with the question of determination of "marketability" of articles. It stated that, "It is difficult to lay down a precise test to determine marketability of articles. Marketability of goods has certain attributes. The essence of marketability is neither in the form nor in the shape or condition in which the manufactured articles are to be found, it is the commercial identity of the articles known to the market for being bought and sold. The fact that the product in question is generally not being bought and sold or has no demand in the market would be irrelevant."

From the above discussion, it can be said that CERs qualify as "goods" as they have intrinsic value and are movable and freely transferable. Moreover, CER's always have had a market of their own.

The issue pertaining to determine the nature of Carbon Credit/CERs as goods, was deliberated under the Notification No. 256/CDVAT/2009/43 dated 13.01.2010 issued by the Commissioner, Trade and Taxes, Delhi VAT under section 85 of the Delhi VAT 2004. The Commissioner analyzed the definition of "goods", "dealer" and "sale" under the DVAT Act, 2004 in relation to CERs and the cases being Yash Overseas (supra), Vikas Sales Corporation (supra) and Tata Consultancy Services (supra) were discussed by the Commissioner in regard to the taxability of CERs as "goods". Thereafter, vide the said Notification, CERs were declared as goods under the DVAT law. Relevant part of the said Notification is as follows:

"A careful examination of the product called Certified Emission Reductions (CERs) commonly known as carbon credits shows that it is a certificate having market value. There are people/entities who are willing to sell and others who are willing to purchase such certificates. The intrinsic nature and value of carbon credits coupled with their free transferability makes the said product a marketable commodity. The said product is therefore covered under the definition of the term "goods" as it figures in sub-section (1) of Section 2 of DVAT Act, 2004.

Further, any person/company/entity undertaking the activity of sale and purchase of carbon credits (CERs) is a dealer in terms of the definition of the dealer as contained in sub-section (1) of Section 2 of DVAT Act, 2004. The transaction of sale of carbon credits (CERs) by a person/entity to another person/entity constitutes "sale" in terms of the definition of term as contained in Section 2(1)(zc) of DVAT Act, 2004.

It is also pertinent to refer to Entry No. 3 of IIIrd Schedule appended to the DVAT Act, 2004 which reads as follows :-

Entry No. 3 of IIIrd Schedule

"01-04-2005

All intangible goods like copyright, patent, rep license, goodwill etc."

The nature, substance and manner/modalities of the trading of CERs (carbon credits) makes the product known as Certified Emission Reductions (CERs) similar to the products mentioned in the said entry. Thus, the item CER is covered by the aforesaid entry."

The Commissioner vide the aforementioned Notification declared Carbon Credits /CERs as goods as they have certain intrinsic value, are capable of being brought, sold, transferred and possessed and are no different from ordinary commodity bought and sold in the market. Hence, its sale is liable to value added tax in the State.

Further, Carbon Credits were declared as goods under the Securities Contracts (Regulation) Act, 1956. The National Commodity & Derivative Exchange Limited (NCDEX) vide the Circular No. NCDEX/ TRADING-035/2008/080 dated April 7, 2008, notified the launch of future/forwards contract pertaining to CER/Carbon Credit. Further pursuant to the repeal of the Forward Contracts (Regulation) Act, 1952 (FCRA) and amendment to the Securities Contracts (Regulation) Act, 1956 (SCRA), the Central Government vide Notification No. S.O.3068(E) dated September 27, 2016 notified carbon credits as goods for the purposes of clause (bc) of section 2 of SCRA. i.e. to be treated as commodity derivative which is not a security.

CERs are alike Priority Sector Lending Certificates (PSLCs) and Renewable Energy Certificates (RECs). PSLCs are tradable certificates issued against priority sector loans of banks so as to enable banks to achieve their specified target and sub-targets for priority sector lending through purchase of these instruments in the event of a shortfall and at the same time incentivizing the surplus banks to lend more to these sectors. REC also known as green energy certificates or tradable renewable certificates certifying that the bearer owns one megawatt-hour (MWh) of electricity generated from a renewable energy resource. Once the power provider has fed the energy into the grid, the REC they receive can then be sold in the open market as a commodity. Therefore, it is evident that CERs, RECs and PSLCs are the certificates having intrinsic value traded in the market.

Further, the Central Government issued the Circular No. 34/8/2018-GST dated 01.03.2018 and Circular No. 46/20/2018-GST dated 06.06.2018, whereby the applicability of GST on PSLCs and RECs has been clarified. The government vide the latter clarified that RECs, PSLCs etc. are classified under heading 4907 and will accordingly attract GST @ 12 % instead of 18% under the residual head, which was earlier clarified by the Circular No. 34/8/2018-GST dated 01.03.2018. An extract of Schedule II to Notification Number 1/2017-Central Tax (Rate), dated 28.06.2017 which provides for the rate of tax on Chapter 4907 goods is reproduced below:

A new section 194Q was introduced vide Finance Act, 2021 to Income Tax Act, 1961. It applies to any buyer who is responsible for paying any sum to any resident seller for purchase of any goods of the value or aggregate of value exceeding fifty lakh rupees in any previous year. It has been clarified vide Circular No. 13 of 2021 dt. 30.06.2021 as under:

In order to remove such difficulties, it is provided that the provisions of section 194Q of the Act shall not be applicable in relation to,-

1. transactions in securities and commodities which are traded through recognized stock exchanges or cleared and settled by the recognized clearing corporation, including recognized stock exchanges or recognized clearing corporation located in International Financial Service Centre;
2. transactions in electricity, renewable energy certificates and energy saving certificates traded through power exchanges registered in accordance with Regulation 21 of the CERC;

and for this purpose,- (i) "recognized clearing corporation" shall have the meaning assigned to it in clause (i) ofthe Explanation to clause (23 EE) of section 10 of the Act; (ii) "recognized stock exchange" shall have the meaning assigned to it in clause (ii) of the Explanation I to sub-section (5) of section 43 of the Act; and (iii) "International Financial Services Centre" shall have the meaning assigned to it in clause (q) of section 2 of the Special Economic Zones Act, 2005.

This amendment also suggests that the RECs need to be considered as goods. If this view is accepted, then CERs may also need to be treated as goods only.

Conclusions under Indirect Tax laws:

Considering the objective of carbon trading, which is reduction of emissions of greenhouse gases and encouragement of use of renewable energy in industry, taxing the supply of CERs doesn't seem appropriate as increased cost will put extra burden on buyers resulting in to less demand of CERs. Less demand would inevitably deter the companies to make extra efforts in acquiring carbon credit by cutting on their carbon emission and acquiring means of generating energy though renewable sources. The duty credit scrips issued under FTP viz., MEIS, SEIS are exempted by way of a notification No.34/2017-CT(R) dt.13.10.2017 by inserting the S.No.122A in Notification No.02/2017-CT(R) dt.28.06.2017 as they are result of export efforts by the industry. A similar treatment merits the carbon credits also, as they help in addressing the global warming. Legislature should take appropriate steps to clarify the ambiguity under both the tax laws and sooner would be better.

*****************************************

[1] Apollo Tyres Ltd. [TS-5211-ITAT-2014(Cochin)-O]

[2] Tamil Nadu Newsprint & Papers Ltd. [TS-6161-HC-2021(Madras)-O]; Ambika Cotton Mills Ltd. [TS-5470-HC-2021(Madras)-O]; Subhash Kabini Power Corporation Ltd. [TS-5404-HC-2016(Karnataka)-O]; L.H. Sugar Factory (P.) Ltd. [TS-6483-HC-2016(Allahabad)-O]; Aditya Birla Nuvo Ltd. [TS-8048-ITAT-2021(MUMBAI)-O]; Kalpataru Power Transmission Ltd. [TS-5164-HC-2017(Gujarat)-O]; My Home Power Ltd. [TS-820-ITAT-2012(HYD)-O]

[3] https://read.oecd-ilibrary.org/taxation/model-tax-convention-on-income-and-on-capital-2017-full-version_510415f2-en#page10

[4] http://kb.icai.org/pdfs/PDFFile5b279b53a1f7c7.90215293.pdf