/ Direct Tax

Centre Grants Section 54EC Tax Benefit Status to IREDA Bonds

IREDA Bonds as Long-Term Specified Asset U/s 54EC

CBDT Notifies IREDA Bonds as Long-Term Specified Asset U/s 54EC

The Central Board of Direct Taxes has officially notified bonds issued by the Indian Renewable Energy Development Agency as long-term specified assets u/s 54EC of the Income Tax Act, 1961. This provides taxpayers with an additional avenue for claiming capital gains tax exemption, while also supporting India’s clean energy goals.

This Bond is issued by Indian Renewable Energy Development Agency & it is Non-transferable bond with redeemable after 5 years, and tax benefits can be Eligible for capital gains exemption u/s 54EC . However, the Investment Cap limit is ₹50 lakh per financial year. This bond’s purpose is for proceeds to be exclusively used for renewable energy projects.

Funds raised through IREDA bonds will be deployed exclusively for renewable energy projects. These projects will be capable of servicing debt through their own revenues, without reliance on State Governments. This policy move is expected to Lower IREDA’s cost of funds, Accelerate financing for clean energy projects, Promote private investment in sustainable infrastructure and Support India’s target of achieving 500 GW of non-fossil fuel capacity by 2030

Indian Renewable Energy Development Agency’s CMD welcomed the notification, noting that the tax-exempt status of these bonds will attract wider investor participation and enhance fund availability. This supports India’s target of achieving 500 GW of non-fossil fuel energy capacity by 2030, marking a key step toward a cleaner and more sustainable energy future. CBDT’s decision to notify IREDA bonds under Section 54EC is a win-win for both investors and the environment

IREDA Bonds Notified as Tax-Exempt U/s 54EC to Boost Renewable Energy Investment

Understanding Section 54EC

Section 54EC allows taxpayers to claim exemption on Long-Term Capital Gains (LTCG) if the gains are reinvested within 6 months into notified bonds. Conditions include minimum lock-in period of 5 years & investment only in bonds issued by notified entities, such as NHAI, REC & Now added Indian Renewable Energy Development Agency.   Section 54EC allows taxpayers to claim exemption Benefits to Investors

  • Capital Gains Tax Savings: Exemption on LTCG up to ₹50 lakh
  • Green Investment: Encourages contribution toward India’s renewable energy mission
  • Low Risk Instrument: Backed by a government-owned financial institution

This indicate Promotes Green Financing Aligns with India’s energy transition and climate commitments & Diversifies Tax-Saving Instruments for Broadens investment choices for taxpayers & Boosts Indian Renewable Energy Development Agency’s Capital Base which Helps in mobilizing funds for sustainable energy projects.  IREDA now joins the ranks of other notified institutions like NHAI and REC, expanding the list of available tax-saving bonds

This notification represents a major boost for investors seeking tax-efficient instruments, while simultaneously strengthening the ecosystem for renewable energy financing in India. It is a key policy step toward achieving the country’s long-term climate and energy goals.

**********************************************************

If this article has helped you in any way, i would appreciate if you could share/like it or leave a comment. Thank you for visiting my blog.

Legal Disclaimer:
The information / articles & any relies to the comments on this blog are provided purely for informational and educational purposes only & are purely based on my understanding / knowledge. They do noy constitute legal advice or legal opinions. The information / articles and any replies to the comments are intended but not promised or guaranteed to be current, complete, or up-to-date and should in no way be taken as a legal advice or an indication of future results. Therefore, i can not take any responsibility for the results or consequences of any attempt to use or adopt any of the information presented on this blog. You are advised not to act or rely on any information / articles contained without first seeking the advice of a practicing professional.