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The central government has granted tax-saving status to IREDA Ltd.'s bonds under Section 54EC of the Income Tax Act, effective July 9, 2025. This allows investors to save capital gains tax up to INR 50 lakh on five-year redeemable bonds. The initiative aims to facilitate low-cost fundraising for renewable energy projects that can self-service debt. It strengthens India's renewable energy financing ecosystem, contributing to the nation's 500 GW non-fossil fuel capacity target by 2030.
The central government has recently granted tax-saving status to bonds issued by a state-owned financial institution. The notification, which came into effect on July 9, 2025, impacts the renewable energy financing sector across India. This move aims to encourage investment in green energy projects and lower funding costs by classifying IREDA Ltd.'s bonds as 'long-term specified assets.' Advertisement
The Central Board of Direct Taxes (CBDT) under the Ministry of Finance classified these bonds issued by the Indian Renewable Energy Development Agency Ltd. (IREDA). Bonds redeemable after five years and issued on or after July 9 will qualify for tax exemption benefits under Section 54EC of the Income-tax Act, 1961. Eligible investors can save tax on Long Term Capital Gain (LTCG) up to INR 50 lakh per financial year by investing in these bonds. This policy aims to facilitate low-cost fundraising for IREDA and the renewable energy sector. Proceeds from these bonds will be used exclusively for renewable energy projects that can service their own debt, without relying on state governments for debt servicing.
This initiative supports the faster development of the renewable energy sector. This move contributes to India's commitment to reaching 500 GW of non-fossil electricity capacity and generating half of all energy requirements from renewables by 2030, as pledged at COP26 in 2021. India also aims to reduce emissions by 1 billion tonnes, reduce the emissions intensity of its GDP by 45%, and achieve net-zero emissions by 2070.
Pradip Kumar Das, Chairman and Managing Director of IREDA, expressed gratitude for the policy initiative, stating that this recognition reinforces IREDA's role in accelerating renewable energy financing.
Source- ANI
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