Accounting guidelines on carbon credits will come into force from July 1. “The Council of the Institute of Chartered Accountants of India (ICAI) has scheduled a meeting between June 18-20 to approve the accounting guidelines on carbon credits,” S Santhana Krishnan, chairman, Accounting Standards Board, ICAI, told. Krishnan said that the guidelines will be made applicable to companies with effect from July 1.Online GST Certification Course by TaxGuru & MSME- Click here to Join
This means, corporates will have to account for their issued carbon credits, as well as carbon credits which they may have sold in the current financial year, in the September quarter results.
For the current financial year, companies will have to account for carbon credits sold or issued to them by the United Nations Framework Convention on Climate Change (UNFCCC) from April 1 this year.
The core group, which framed the draft guidance note on the accounting guidelines, has concluded that carbon credits are “intangible assets” and they need to be treated as “inventory” in the balance sheet till they are sold.