In a significant step that aligns with India’s green energy ambitions under Azadi Ka Amrit Mahotsav, the Central Board of Direct Taxes (CBDT) has granted the much-anticipated Section 54EC tax benefit status to bonds issued by the Indian Renewable Energy Development Agency Ltd. (IREDA). The official notification, released on July 9, 2025, classifies IREDA bonds as “long-term specified assets” under the Income Tax Act, 1961. This move is expected to catalyze investment in the renewable energy sector while offering investors a robust tax-saving opportunity.
Under Section 54EC of the Income Tax Act, individuals can claim exemption from long-term capital gains (LTCG) tax by investing in notified bonds within six months of the asset sale. With this new inclusion, IREDA joins the list of institutions like NHAI and REC whose bonds are recognized under this tax-saving provision. Investors can now save up to ₹50 lakh in a financial year by investing their LTCG in these bonds, which are redeemable after five years.
This development couldn’t be more timely. As India marks 75 years of independence through the Azadi Ka Amrit Mahotsav initiative, it is also charting a course toward energy independence through sustainable means. The announcement reflects the government’s continued commitment to fostering renewable energy investments while empowering organizations like IREDA to play a central role in this transition.
Importantly, the proceeds from these IREDA bonds will be directed exclusively toward renewable energy projects that are financially self-sustaining — meaning they will generate enough revenue to service debt independently, without relying on state government guarantees. This not only ensures the financial viability of the projects but also enhances investor confidence in the sector’s growth trajectory.
Shri Pradip Kumar Das, Chairman and Managing Director of IREDA, welcomed the announcement with optimism. “We are deeply grateful to the Ministry of Finance, Ministry of New & Renewable Energy, and CBDT for this valuable policy initiative,” he said. “This recognition reinforces IREDA’s pivotal role in accelerating renewable energy financing in the country. The tax-exempt status will not only attract investors but also provide IREDA access to lower-cost funds.”
The decision is expected to encourage broader participation from investors, particularly those seeking safe and tax-efficient investment options. At the same time, it strengthens the capital foundation for India’s ambitious goal of achieving 500 GW of non-fossil fuel capacity by 2030—a target that lies at the heart of its commitments under the Paris Agreement and its journey toward net-zero emissions.
As part of the broader celebrations of Azadi Ka Amrit Mahotsav, this policy step reaffirms India’s forward-looking energy policies, blending financial incentives with environmental stewardship. It marks a notable win for climate-conscious investors and for the country’s rapidly evolving renewable energy sector.