Centre Grants Section 54EC Tax Benefit Status To IREDA Bonds
Move Expected to Attract Tax-Saving Investors and Boost Renewable Energy Financing
In a significant policy development aimed at bolstering green energy investments, 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 assets’ under Section 54EC of the Income-tax Act, 1961. The notification came into effect on July 9, 2025.
With this designation, IREDA bonds redeemable after five years and issued on or after the notification date will qualify for capital gains tax exemption under Section 54EC. This section enables investors to claim exemption on Long-Term Capital Gains (LTCG) by investing up to ₹50 lakh in specified bonds within a financial year.
The proceeds raised through these bonds will be exclusively deployed in renewable energy projects, specifically those that are financially sustainable and capable of servicing debt through project revenues—without reliance on State Government guarantees or support.
The tax-exempt status is expected to enhance the attractiveness of IREDA bonds among investors seeking tax-saving instruments, while simultaneously reducing the cost of funds for IREDA, thereby supporting faster growth of India’s renewable energy sector.
Welcoming the move, Pradip Kumar Das, Chairman & Managing Director, IREDA, said: “We are deeply grateful to the Ministry of Finance, Ministry of New & Renewable Energy, and the CBDT for this valuable policy initiative. This recognition reinforces IREDA’s pivotal role in accelerating renewable energy financing in the country. The tax-exempt status for our bonds will not only offer an attractive investment avenue for taxpayers but also ensure increased capital availability for green energy projects, significantly contributing to India’s 500 GW non-fossil fuel capacity target by 2030.”
This policy initiative is poised to strengthen India’s renewable energy financing ecosystem and facilitate broader investor participation, aligning with the nation’s commitment to a sustainable energy future.
