New Delhi: In a significant boost to India’s renewable energy sector, the Central Board of Direct Taxes (CBDT) under the Ministry of Finance has notified bonds issued by the Indian Renewable Energy Development Agency Ltd. (IREDA) as ‘long-term specified asset’ under section 54EC of the Income-tax Act, 1961, effective from July 9, 2025.
This landmark notification designates IREDA bonds, redeemable after five years and issued on or after the notification date, as eligible for tax exemption benefits under section 54EC, which provides capital gains tax exemption for investments in specified bonds. The proceeds from these bonds will be exclusively channelled into renewable energy projects capable of servicing debt through their project revenues, without relying on State Governments for debt servicing, ensuring financial sustainability and independence for these initiatives.
The notification allows eligible investors to save tax on Long Term Capital Gain (LTCG) up to Rs. 50 Lakhs by investing in these bonds within a Financial Year, offering a compelling tax-saving avenue for individuals and institutions alike. For IREDA, this move translates into a lower cost of funds, a development poised to accelerate the growth of the renewable energy sector by enhancing capital availability for green energy projects. This financial incentive aligns with India’s ambitious target of achieving 500 GW of non-fossil fuel capacity by 2030, reinforcing the country’s commitment to sustainable development and clean energy.
Pradip Kumar Das, Chairman & Managing Director of IREDA, hailed the decision, stating, “We are deeply grateful to the Ministry of Finance, Ministry of New & 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.”
The move is expected to draw significant interest from investors seeking tax-saving instruments, thereby strengthening the renewable energy financing ecosystem in India. By offering a dual benefit of tax savings and support for sustainable projects, the initiative is set to broaden participation in green investments, fostering a robust framework for renewable energy development and advancing India’s clean energy goals.
– global bihari bureau
