New Delhi [India], July 10 (ANI): The central government has granted tax-saving status to PSU renewable projects financing company IREDA Ltd's bonds under Section 54EC of the Income Tax Act.

This will facilitate low-cost fundraising for renewable energy and offer capital gains tax exemption to investors.

The Central Board of Direct Taxes (CBDT) under the Ministry of Finance has notified bonds issued by the Indian Renewable Energy Development Agency Ltd. (IREDA) as 'long-term specified asset' under section 54EC of the Income-tax Act, 1961.

The notification came into effect from July 9, 2025, as per a statement from the Ministry of New and Renewable Energy on Thursday.

As per the notification, bonds redeemable after five years and issued by IREDA on or after the notification date will qualify for tax exemption benefits under section 54EC of the Income Tax Act, 1961, which allows capital gains tax exemption on investments in specified bonds.

'The proceeds from these bonds will be utilised exclusively for renewable energy projects capable of servicing debt through their project revenues, without dependence on State Governments for debt servicing,' said the MNRE statement.

Eligible investors can save tax on Long Term Capital Gain (LTCG) up to Rs 50 lakhs by investing in these Bonds in a financial year.

IREDA will benefit from lower costs of funds, a significant development for the renewable energy sector, which in turn supports the expeditious development of the renewable energy sector.

Welcoming the move, Pradip Kumar Das, Chairman and Managing Director, IREDA, said, 'We are deeply grateful to the Ministry of Finance, Ministry of New & Renewable Energy and 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,' said Das in the statement.

This move is expected to attract wider participation from investors seeking tax-saving instruments and to strengthen the country's renewable energy financing ecosystem.

At COP26 held in 2021, India committed to an ambitious five-part 'Panchamrit' pledge. They included reaching 500 GW of non-fossil electricity capacity, generating half of all energy requirements from renewables, and reducing emissions by 1 billion tonnes by 2030.

India, as a whole, also aims to reduce the emissions intensity of its GDP by 45 per cent. Finally, India commits to net-zero emissions by 2070. (ANI)