CBDT grants IREDA bonds tax-exempt status

The Central Board of Direct Taxes (CBDT), under the Ministry of Finance, has notified that bonds issued by 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 took effect on July 9, 2025.

As per the notification, IREDA bonds that are redeemable after five years and issued on or after the effective date will qualify for capital gains tax exemption under section 54EC. This section allows investors to save tax on long-term capital gains (LTCG) by investing up to Rs 5 million in eligible bonds in a financial year.

The funds raised through these bonds will be used exclusively for renewable energy projects. These projects must be capable of repaying debt from their revenues, without relying on State Governments for debt servicing.

This move will lower IREDA’s cost of funds, making capital more accessible for clean energy projects.