Financial efficacy of a CDM forestry project for realization of carbon benefits on account of carbon sequestration service provided by the afforestation or reforestation interventions under CDM has been studied for four different sized projects. All the costs associated with the preparation of these projects such as costs on project development, validation, registration, monitoring, verification & certification, issuance of CERs, adaptation levey and the Tax implications have been taken into account and benefits were estimated assuming a carbon sequestration rate of 2tC/ha/year under two price scenarios.