Has the Centre Extended Tax Exemption Benefits to IREDA Bonds?
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Synopsis
Discover how the recent notification by the CBDT empowers IREDA bonds with tax exemption benefits, potentially transforming the landscape for green investments in India. This proactive step aims to bolster renewable energy financing and attract more investors to sustainable projects.
Key Takeaways
- Tax exemption benefits for IREDA bonds effective from July 9, 2025.
- Investors can save up to Rs 50 lakh on Long Term Capital Gains tax.
- Proceeds from bonds will fund renewable energy projects.
- IREDA reported a 49% increase in net profit for Q4 FY 2024-25.
- The initiative aims to bolster green energy financing in India.
New Delhi, July 10 (NationPress) The Central Board of Direct Taxes (CBDT) has designated bonds issued by the Indian Renewable Energy Development Agency Ltd. (IREDA) as "long-term specified assets", allowing them to receive tax exemption benefits under section 54EC of the Income-tax Act.
The tax exemption is effective from July 9, 2025.
According to the CBDT notification, bonds that are redeemable after five years and issued by IREDA from the date of notification will be eligible for tax exemption benefits under section 54EC of the Income Tax Act, 1961, which permits capital gains tax exemption on investments in designated bonds.
The funds raised from these bonds will be directed exclusively towards renewable energy projects that can service their debts through project revenues, without relying on State Governments for debt servicing, as stated in the official announcement.
Investors who qualify can save tax on Long Term Capital Gain (LTCG) up to Rs 50 lakh by investing in these bonds within a financial year. IREDA will experience a reduced cost of funds, which is a crucial advancement to bolster the swift development of the renewable energy sector.
IREDA Chairman & Managing Director Pradip Kumar Das expressed gratitude for the notification, stating, "We are immensely thankful to the Ministry of Finance, Ministry of New and Renewable Energy, and the Central Board of Direct Taxes for this significant policy initiative. This recognition from the Government enhances IREDA's central role in boosting renewable energy financing in the nation. The tax-exempt status of our bonds will provide a compelling investment option while ensuring increased capital for green energy projects, aiding India's goal of achieving 500 GW non-fossil fuel capacity by 2030."
This initiative is anticipated to draw in more investors interested in tax-saving instruments and fortify the renewable energy financing framework of the country.
Furthermore, IREDA reported a robust 49 percent increase in net profit to Rs 502 crore for the January-March quarter of the financial year 2024-25, compared to Rs 337 crore during the same period in the prior fiscal year.
The largest pure-play green financing NBFC in the country achieved a revenue of Rs 1,392 crore in the fourth quarter, marking a 37.7 percent rise from Rs 1,916 crore in Q4 of FY 2023-24.
The government-owned NBFC also recorded a 27 percent increase in loan sanctions for the fourth quarter, reaching Rs 47,453 crore, while loan disbursements climbed 20 percent to Rs 30,168 crore.
Point of View
It's evident that the government is taking significant strides towards boosting renewable energy financing in India. This initiative not only addresses investor interests in tax-saving avenues but also aligns with the nation's commitment to sustainable development. As a national news platform, we stand firmly behind initiatives that promote green energy and financial growth, reinforcing the importance of responsible investment in our future.
NationPress
06/08/2025
Frequently Asked Questions
What is the significance of the CBDT's notification regarding IREDA bonds?
The CBDT's notification designates IREDA bonds as long-term specified assets, enabling them to receive tax exemption benefits under section 54EC, which allows investors to save on capital gains tax.
When do the tax exemption benefits for IREDA bonds begin?
The tax exemption benefits for IREDA bonds are effective from July 9, 2025.
How can investors benefit from investing in IREDA bonds?
Eligible investors can save tax on Long Term Capital Gains up to Rs 50 lakh by investing in IREDA bonds within a financial year.
What will the proceeds from IREDA bonds be used for?
The proceeds from IREDA bonds will be exclusively used for renewable energy projects that can service their debts through project revenues.
How has IREDA performed financially in recent quarters?
IREDA reported a 49% increase in net profit for the January-March quarter of FY 2024-25, reaching Rs 502 crore, alongside significant growth in revenue and loan sanctions.
