NEW DELHI: In a bid to support renewable energy financing in India, 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) will be treated as 'long-term specified assets' under Section 54EC of the Income-tax Act, 1961.
The notification came into effect from July 9, 2025. This means that investors can now save tax on long-term capital gains by investing in IREDA bonds. Under Section 54EC, individuals can invest up to Rs 50 lakh in such bonds within six months of earning long-term capital gains and claim a full tax exemption on those gains.
IREDA bonds will have a lock-in period of five years and will be redeemable afterward. The funds raised will be used only for renewable energy projects that can generate enough revenue on their own, without needing financial help from state governments.
“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,” said Pradip Kumar Das, Chairman & Managing Director, IREDA.
IREDA, a government-owned financial institution under the Ministry of New and Renewable Energy, plays a key role in funding clean energy projects across the country. The tax-free status of its bonds is expected to attract more investors, reduce borrowing costs, and boost renewable energy development.
This move also supports India’s target of achieving 500 GW of non-fossil fuel capacity by 2030 and reinforces the country’s global climate commitments.