IREDA Bonds Get Tax-Saving Status Under Section 54EC: A Boost for Green Investments

In a move to encourage investments in renewable energy, the central government has granted tax-saving status to bonds issued by the Indian Renewable Energy Development Agency Ltd (IREDA). These bonds are now recognised as ‘long-term specified assets’ under Section 54EC of the Income Tax Act. The Central Board of Direct Taxes (CBDT) issued this notification on July 9, 2025.

What Does This Mean for Investors?

With this approval, investors can now save long-term capital gains tax of up to ₹50 lakh in a financial year by investing in IREDA bonds. These bonds must be purchased within six months of earning the capital gains and have a lock-in period of five years. This move not only provides a tax-saving option but also allows investors to contribute to India’s green energy goals.

IREDA Bonds to Support Renewable Energy Projects Across India

IREDA is a public sector company under the Ministry of New and Renewable Energy (MNRE). It finances renewable energy projects across India. The funds raised through these tax-free bonds will be used only for clean energy projects. These projects are expected to repay their debt using revenue from operations, without needing financial support from state governments.

This model promotes financial discipline and builds trust in the clean energy sector. The reduced cost of capital will also help IREDA speed up the development of new renewable energy projects.

Why Did the Government Give Tax-Saving Status to IREDA Bonds? 

This step supports India’s larger climate goals announced at the COP26 summit. These include:

• Achieving 500 GW of non-fossil fuel energy by 2030
• Meeting 50% of energy needs from renewables
• Reducing emissions by 1 billion tonnes
• Lowering emissions intensity by 45%
• Achieving net-zero by 2070

Read more: Hindustan Unilever (HUL) FY25 Earnings Results Decoded: Hers’s What You Need to Know!

Conclusion

The tax-exempt status of IREDA bonds is a win-win for both investors and the renewable energy sector. It provides a safe, long-term investment option while supporting the country’s clean energy mission. As India moves closer to its 2030 climate targets, policies like this will play a crucial role in building a sustainable future.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.