In the present scenario carbon dioxide and greenhouse gas emissions are the foremost environmental problems in India as well as in the world. The increase in pollutants in the atmosphere is due to anthropogenic activities, which put the residents and particularly children in serious health issues. The data which have been gathered till now had revealed that “carbon” and “greenhouse gas emissions” had reached undesirable levels and now affecting the country’s GDP. To solve this major problem, in Kyoto Protocol and Paris Agreement took place. The outcomes of the Protocol were Joint Implementation, Clean Development Mechanism, and International Emission Trading. This helped in reducing emissions in the atmosphere and earning carbon credit through CDM projects. Further to make a Sustainable Economy, a COP-26 meeting in Glasgow under which many countries have committed to make themselves a “NET-ZERO” or “Carbon – Neural” Economy by a specific time-bound. India has also declared to make it Net -Zero economies 2070. This paper is an attempt to identify the role of carbon credit to make a sustainable economy and to analyse the accounting treatment and reporting by the companies.  To know about the accounting treatment Secondary data was collected from the annual report of the company. Also, to know about the perceptions of professionals’ Primary data was collected from 70 academicians and 50 professionals through a mailed questionnaire. The result of the study shows that the awareness level is low among academicians compared to professionals. Based on gender, females are less awarded than males. The study also shows that no uniform accounting system is there for accounting and reporting. European companies are still having methods of calculating credits and proper standards but India is still lagging despite having the world’s biggest carbon market. India has a golden opportunity to generate secondary income from carbon credits and reduce emissions as India’s Carbon Market is the fastest-growing Carbon Market in the World.

Keywords: Sustainable Economy, Net-Zero, Carbon Accounting, Emission Trading, Carbon Neutral, Clean Development Mechanism, Carbon Market, Carbon Credit.