Bonds issued by the Indian Renewable Energy Development Agency (IREDA) on or after 9 July 2025, and redeemable after five years, will now qualify for capital gains tax exemption under Section 54EC of the Income Tax Act, 1961, according to a government notification.
The Indian Renewable Energy Development Agency (IREDA) has secured a significant policy milestone with the classification of its five-year bonds as ‘long-term specified assets’ under Section 54EC of the Income-Tax Act. This designation allows investors to claim exemption on Long-Term Capital Gains (LTCG) of up to ₹5 million per financial year, when invested in eligible IREDA bonds.
According to the Ministry of New and Renewable Energy (MNRE), the move is expected to bolster IREDA’s ability to raise cost-effective capital and channel funds into viable, debt-servicing green projects. These investments will not rely on state guarantees, strengthening the financial discipline and project viability of India’s renewables sector.
Pradip Kumar Das, Chairman & Managing Director, IREDA, welcomed the tax-exempt recognition, saying it reflects the government’s confidence in the agency’s pivotal role in accelerating India’s clean energy ambitions.
“This 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,” Das said.
The bonds are expected to attract a wider base of retail and institutional investors seeking tax-saving instruments with environmental impact. This enhanced access to affordable finance will be particularly beneficial for projects in solar, wind, small hydro, and emerging segments like green hydrogen and offshore wind.
As India pursues its vision of a net-zero emissions economy by 2070, policy instruments such as Section 54EC-linked bonds offer dual value—financial prudence for investors and strategic capital for the clean energy transition. IREDA’s strengthened bond framework reinforces its position as a green financing leader and supports the broader push to decarbonise India’s power sector while maintaining investor appeal.