IREDA gets tax exemption for its bonds

New Delhi: Indian Renewable Energy Development Agency Limited (IREDA) on Thursday said that bonds issued by the company will be exempted from taxes. According to the company, the Central Board of Direct Taxes (CBDT) has notified that bonds issued by IREDA now qualify as ‘long-term specified assets’ under Section 54EC of the Income-tax Act, 1961. The notification came into effect on July 9.

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Under the provision, capital gains tax exemption is available to individuals and entities who invest in specified bonds, provided the investment is made within six months of the asset transfer. With the CBDT’s latest notification, IREDA’s five-year redeemable bonds issued on or after the notification date will be eligible for this exemption. Investors can claim tax exemption on Long Term Capital Gains (LTCG) up to ₹50 lakh in a financial year by investing in these bonds.

The proceeds raised through these bonds will be exclusively channelled towards renewable energy projects that are self-sustaining in terms of debt servicing through project revenues, without relying on state government support.

IREDA Chairman and Managing Director (CMD) Pradip Kumar Das, welcomed the Government’s decision and said, “We are deeply grateful to the Ministry of Finance, Ministry of New & Renewable Energy and CBDT for this valuable policy initiative. This recognition by the Government reinforces IREDA’s pivotal role in accelerating renewable energy financing in the country.”

He further noted that the tax-exempt status of IREDA’s bonds will not only provide investors with an attractive tax-saving instrument but also enable IREDA to access capital at a lower cost, thereby expediting India’s clean energy transition.

The move is expected to enhance investor participation in renewable energy bonds and support India’s ambitious target of achieving 500 GW of non-fossil fuel energy capacity by 2030.

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