CBDT Grants Section 54EC Tax Benefit Status to IREDA Bonds
The Central Board of Direct Taxes has notified bonds issued by IREDA as ‘long-term specified assets’ under Section 54EC of the Income-tax Act, enabling tax exemptions on capital gains for investors and boosting low-cost financing for renewable energy projects.
July 10, 2025. By Mrinmoy Dey
As per the notification, bonds redeemable after five years and issued by IREDA on or after the notification date will qualify for tax exemption benefits under section 54EC, of the Income Tax Act, 1961, which allows capital gains tax exemption on investments in specified bonds.
The proceeds from these bonds will be utilised exclusively for renewable energy projects capable of servicing debt through their project revenues, without dependence on State Governments for debt servicing.
Eligible investors can save tax on Long Term Capital Gain (LTCG) up to INR 50 Lakhs by investing in these Bonds in a Financial Year. IREDA will get benefit in terms of lower cost of funds, which is a significant development for the renewable energy sector, in turn to support the expeditious development of RE sector.
Welcoming the notification, Pradip Kumar Das, Chairman and Managing Director, IREDA, said, “We are deeply grateful to the Ministry of Finance, Ministry of New and Renewable Energy and Central Board of Direct Taxes for this valuable policy initiative. This recognition by the Government reinforces IREDA’s pivotal role in accelerating renewable energy financing in the country. The tax-exempt status for our bonds will offer an attractive investment avenue while ensuring increased capital availability for green energy projects, contributing to India’s 500 GW non-fossil fuel capacity target by 2030.”
This move is expected to attract wider participation from investors seeking tax-saving instruments and strengthen the renewable energy financing ecosystem in the country.
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