CBDT Notifies Bonds Issued by IREDA as Long Term Specified Assets Under Section 54EC

The Central Board of Direct Taxes (CBDT) has notified tax exemption bonds issued by India Renewable Energy Development Agency Ltd. (IREDA) as long-term specified assets under section 54EC of the Income Tax Act 1961 enabling tax exemption on capital gains.

On July 9, 2025 the notification issued by IREDA on the efficient date and redeemable after five years will eligible for long-term capital gains tax exemption under section 54EC. The section provides ease to taxpayers by letting them invest capital gains in specified bonds and avail exemption up to Rs. 50 lakh in a financial year.

The benefits from the bonds will be used mainly to finance renewable energy projects that are capable of servicing debt via project revenues without reliance on State Governments.

Who is Eligible for IREDA Bonds under Section 54EC?

According to the notification, the below conditions must be fulfilled for IREDA bonds to qualify:

• The bonds should be issued by IREDA.
• They should be redeemable after five years.
• The bonds must be issued on or after 09/07/2025.

Pradip Kumar Das, Chairman and Managing Director, IREDA said, “We are deeply grateful to the Ministry of Finance, the Ministry of New and Renewable Energy and the Central Board of Direct Taxes for this valuable policy initiative. This recognition by the Government reinforces IREDA’s pivotal role in accelerating renewable energy financing in the country. The tax-exempt status for our bonds will offer an attractive investment avenue while ensuring increased capital availability for green energy projects, contributing to India’s 500 GW non-fossil fuel capacity target by 2030.”

This update is mainly to encourage more investor participation and support the development of India’s renewable energy financing ecosystem.