FCC

CBDT Notifies IREDA Bonds as Tax-Saving Option for Green Energy

2025-07-15

In a significant step to enhance renewable energy financing in India, the Central Board of Direct Taxes (CBDT), operating under the Ministry of Finance, announced that bonds issued by the Indian Renewable Energy Development Agency Ltd. (IREDA) would be classified as 'long-term specified assets' under Section 54EC of the Income-tax Act, 1961.

The notification, which took effect on July 9, 2025, enables investors to claim tax exemptions on long-term capital gains by investing in IREDA bonds. As per Section 54EC, individuals can invest up to ₹50 lakh in these bonds within six months of realizing capital gains and receive a full exemption on the taxable amount.

These bonds will carry a lock-in period of five years and will be redeemable thereafter. The funds raised through this mechanism will be exclusively directed toward self-sustaining renewable energy projects that do not require financial support from state governments.

Pradip Kumar Das, Chairman and Managing Director of IREDA, stated that the government’s recognition underscored the agency’s key role in driving renewable energy financing in India. He noted that the tax-exempt status of IREDA bonds would create a more appealing investment channel for individuals while simultaneously increasing capital availability for clean energy initiatives. Das also highlighted that this development aligned with India’s broader objective of reaching 500 GW of non-fossil fuel energy capacity by 2030.

As a public sector enterprise under the Ministry of New and Renewable Energy, IREDA plays a central role in funding sustainable energy projects across the country. The move is expected to attract a wider base of investors, lower borrowing costs, and provide critical momentum to India's clean energy transition, thereby supporting its global climate commitments.

News source: The News Indian Express