Centre grants tax benefits to IREDA green bonds

New Delhi

The central government has given tax-saving benefits to bonds issued by the Indian Renewable Energy Development Agency Ltd. (IREDA). This move will help IREDA raise funds at lower costs and encourage more investment in India’s renewable energy sector.

According to a notification from the Central Board of Direct Taxes (CBDT), these bonds are now recognized as "long-term specified assets" under Section 54EC of the Income Tax Act, 1961. This change took effect on July 9, 2025. Investors who put money in these bonds can save on long-term capital gains tax, up to ₹50 lakh in a financial year.

The bonds, which can be redeemed after five years, will be used only for renewable energy projects. These projects will repay the debt through their own revenue, without relying on state government support.

Pradip Kumar Das, Chairman and Managing Director of IREDA, thanked the government for this important decision. He said, "This policy supports IREDA’s role in speeding up renewable energy financing. The tax-free status makes our bonds an attractive investment choice and will help us gather more funds for green projects."

This step is expected to draw more investors looking for tax-saving options and to strengthen funding for renewable energy. It also supports India’s larger climate goals. At the COP26 summit in 2021, India promised to reach 500 GW of non-fossil fuel power capacity by 2030, generate half of its energy from renewables, and achieve net-zero emissions by 2070.