IREDA Bonds Gain Tax-Exempt Status, Boosting Renewable Energy Investments

The Indian central government has conferred tax-saving status on bonds issued by the Public Sector Undertaking, Indian Renewable Energy Development Agency Ltd (IREDA). Recognized under Section 54EC of the Income Tax Act, these bonds enable low-cost fundraising for renewable energy projects and provide capital gains tax exemption for investors.

The Central Board of Direct Taxes (CBDT) under the Ministry of Finance has notified these bonds as a 'long-term specified asset', effective from July 9, 2025, according to the Ministry of New and Renewable Energy. Bonds issued by IREDA, redeemable after five years, will benefit from this new tax exemption aimed at bolstering the renewable energy sector.

Investors can avail of tax savings on Long Term Capital Gains up to Rs 50 lakhs annually by investing in IREDA's bonds, which is crucial for the rapid development of India's renewable energy industry. IREDA's Chairman, Pradip Kumar Das, expressed gratitude for this policy, emphasizing its role in supporting India's 500 GW non-fossil fuel capacity target by 2030.

This initiative is anticipated to attract broader investor participation, enhancing the renewable energy financing ecosystem. It aligns with India's commitments presented at COP26, aimed at expanding renewable electricity capacity and reducing emissions, ultimately reaching net-zero by 2070.