Ministry of Finance Notifies IREDA Bonds as Long-Term Specified Asset Under Section 54EC of IT Act

The Ministry of Finance has notified bonds issued by the Indian Renewable Energy Development Agency (IREDA) as 'long-term specified assets' under Section 54EC of the Income-tax Act, 1961. This development allows taxpayers to claim capital gains exemption by investing in these bonds, effective from July 9, 2025.

The notification, issued via S.O. 3060(E) by the Central Board of Direct Taxes (CBDT), applies to IREDA bonds that are redeemable after five years and issued on or after the date of the notification.

Key Highlights

• Exemption Provision: Investors can now claim capital gains tax exemption under Section 54EC by investing in IREDA bonds.
• Eligible Bonds: Only IREDA bonds issued on or after July 9, 2025, and with a maturity of five years or more are eligible.
• Utilization Clause: Proceeds from these bonds must be deployed only in renewable energy projects that are financially self-sustaining-i.e., they must service their debt from project revenues without reliance on State Governments.

Boost for Clean Energy Financing

This move is aimed at promoting India's climate goals and accelerating private investment in clean energy infrastructure. IREDA, a government-owned Non-Banking Financial Company (NBFC), plays a critical role in financing renewable energy projects across the country. The classification of its bonds as long-term specified assets under Section 54EC now brings it at par with entities like REC and NHAI.

By investing in these notified bonds, taxpayers can now avoid paying capital gains tax on profits earned from the sale of immovable property, provided the investment is made within six months of such sale and subject to the overall Rs 50 lakh limit.

Conclusion

With this notification, the government strengthens its twin objectives of taxpayer relief and sustainable energy development. Investors looking to claim capital gains exemption under Section 54EC now have a new, eco-conscious avenue through IREDA bonds, while India inches closer to its renewable energy targets.

Official copy of the notification has been attached