On 10-7-2025, the Ministry of Finance officially granted Section 54EC tax benefit status to Indian Renewable Energy Development Agency Ltd. (‘IREDA’) bonds. In a major boost to India’s renewable energy financing ecosystem, the Central Board of Direct Taxes (‘CBDT’) classified these instruments as ‘long-term specified assets’ under Section 54EC. This notification came into effect on 9-7-2025.
Key Points of tax benefit status given to IREDA bonds:
- According to this notification, classified IREDA bonds issued on or after this notification coming into play and redeemable after five years, will qualify for capital gains tax exemption under Section 54EC of the Income-tax Act, 1961.
- The funds raised through these bonds will be allocated exclusively to renewable energy projects that can generate sufficient revenue to service their own debt without relying on financial support from State Governments.
- The investors can claim exemption on long-term capital gains up to ₹50 lakh per financial year through investment in these bonds.
- After this announcement, Shri Pradip Kumar Das, Chairman & Managing Director of IREDA expressed his appreciation and stated that this policy recognition strengthens IREDA’s central role in advancing renewable energy financing.
- Additionally, he said that giving tax-exempt status to IREDA bonds will be pivotal move to attract more option for investors and significantly boost capital flow into green energy projects.
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This measure aligns with India’s strategic target of achieving 500 GW of non-fossil fuel capacity by 2030, making clean energy investments more tax-efficient and investor-friendly.
By granting Section 54EC tax benefit status to IREDA bonds, the Central Government has taken a forward-thinking step towards aligning financial instruments with national climate goals. It marks not only a fiscal incentive but also a strong signal of policy continuity in supporting India’s energy transition.
