The effects of compost application on soil carbon sequestration potential and carbon budget of a tropical sandy soil was studied. Greenhouse gas emissions from soil surface and agricultural inputs (fertiliser and fossil fuel uses) were evaluated. The origin of soil organic carbon was identified by using stable carbon isotope. The CO2, CH4 and N2O emissions from soil were estimated in hill evergreen forest (NF) plot as reference, and in the corn cultivation plots with compost application rate at 30 Mg ha−1 y−1 (LC), and at 50 Mg ha−1 y−1 (HC). The total C emissions from soil surface were 8·54, 10·14 and 9·86 Mg C ha−1 y−1 for NF, HC and LC soils, respectively. Total N2O emissions from HC and LC plots (2·56 and 3·47 kg N2O ha−1 y−1) were significantly higher than from the NF plot (1·47 kg N2O ha−1 y−1). Total CO2 emissions from fuel uses of fertiliser, irrigation and machinery were about 10 per cent of total CO2 emissions. For soil carbon storage, since 1983, it has been increased significantly (12 Mg ha−1) under the application of 50 Mg ha−1 y−1 of compost but not with 30 Mg ha−1 y−1. The net C budget when balancing out carbon inputs and outputs from soil for NF, HC and LC soils were +3·24, −2·50 and +2·07 Mg C ha−1 y−1, respectively. Stable isotope of carbon (δ13C value) indicates that most of the increased soil carbon is derived from the compost inputs and/or corn biomass. Copyright © 2011 John Wiley & Sons, Ltd.