Page 52 - Policy Economic Report - July 2025

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Centre Grants Section 54EC Tax Benefit Status to IREDA Bonds

Central Board of Direct Taxes (CBDT) under the Ministry of Finance has notified bonds issued by 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 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.

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 get benefit in terms of lower cost of funds, which is a significant
development for the renewable energy sector, in turn to support the expeditious development of RE
sector.

Welcoming the notification, Shri Pradip Kumar Das, Chairman & 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.”

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

India’s Renewable Rise: Non-Fossil Sources Now Power Half the Nation’s Grid

India has achieved a landmark in its energy transition journey by reaching 50% of its installed electricity
capacity from non-fossil fuel sources—five years ahead of the target set under its Nationally Determined
Contributions (NDCs) to the Paris Agreement. This significant milestone underscores the country’s
steadfast commitment to climate action and sustainable development, and signals that India’s clean
energy transition is not only real but also accelerating under the leadership of Prime Minister Shri
Narendra Modi.

Union Minister of New and Renewable Energy Shri Pralhad Joshi said “In a world seeking climate solutions,
India is showing the way. Achieving 50% non-fossil fuel capacity five years ahead of the 2030 target is a
proud moment for every Indian. Prime Minister Shri Narendra Modi’s leadership continues to drive
Bharat’s green transformation — paving the path towards a self-reliant and sustainable future.”

Policy-Driven Progress Fuelling Clean Energy Growth

This achievement reflects the success of visionary policy design, bold implementation, and the country’s
deep commitment to equity and climate responsibility. Flagship programmes such as PM-KUSUM, PM

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