The present study was conducted in Belgaum district, the major vegetable producing district of north Karnataka. Large numbers of farmers practice the organic cultivation of chilli in the district. For the study, 30 farmers each practicing organic and inorganic cultivation of chilli spread over the district of Belgaum were selected randomly. The data collected from respondents was analysed using budgeting technique. The estimated per acre cost of cultivation of organic and inorganic chilli was ` 18337.00 and `19115.00 respectively. The per acre average yield of organic chilli was 4.10 tonnes as against 4.86 tonnes in inorganic chilli. The per tonne market prices for organic and inorganic chilli were ` 9830.00 and ` 6300.00, respectively. The transportation cost including loading and unloading for organic chilli was ` 265.00 per tonne as against ` 285.00 for inorganic chilli. The per tonne commission charges for organic and inorganic chilli were ` 644.00 and ` 432.00, respectively. The total marketing cost per acre for organic chilli was ` 3726.00 as against ` 3485.00 for inorganic chilli. The gross returns of organic chilli were ` 40290.00 per acre as against ` 30583.00 for inorganic chilli. The net returns of organic chilli (` 18227.00) were higher than that of inorganic chilli (` 7984.00). The B:C for organic chilli was 1.83 as against 1.35 for inorganic chilli. Hence it is advisible for the farmers to switch over to organic farming which minimizes the environmental degradation and also brings higher net returns