Soil carbon sequestration is a complex process influenced by agricultural practices, climate and soil conditions. Labile organic carbon is sensitive to soil management practices and thus provides better management of carbon dynamics than total carbon alone. Thus, an attempt is made here to investigate the Carbon sequestration potential and labile pool of soil organic carbon (SOC) in post kharif-2014 in flooded tropical rice (Oryza sativa L.) under long-term fertilizer experiment started in the year 2005–06 in the central farm of Odisha University of Agriculture and Technology (OUAT) under All India Coordinated Research Project (AICRP) taking rice as a test crop. The experiment was laid out in a Randomized Block Design with quadruplicated treatments. The treatments include no fertilization, 100% N, 100% NP, 100% NPK, 150% NPK and 100% NPK+FYM. The results revealed that cultivation over the years caused a 14% decrease in SOC in unfertilized control over uncultivated soil. The carbon sequestration potential (1.77 Mg ha−1) was highest in 100%NPK +FYM treatment. The greater accumulation of microbial biomass C, water and extractable carbon (WEO-C), potassium permanganate oxidizable C (KMnO4-C) was recorded in 100%NPK + FYM treatment. The highest carbon management index (CMI) was computed in 100%NPK with FYM. CMI can be used as a more sensitive indicator of the rate of change of SOC in response to soil management changes. Results suggested that 100% NPK+ FYM are adequate for maintaining SOC stock and this practice may help in maintaining the sustainability of rice-rice cropping system.