IREDA Bonds Gain Tax-Free Status to Boost Renewable Energy Investments

State-owned IREDA's bonds have received tax exemption status, making them attractive investments for those seeking to save on capital gains tax. This move aims to strengthen the renewable energy financing ecosystem by ensuring funds are channeled effectively towards green projects, supporting India's renewable energy goals.

The Central Board of Direct Taxes has designated bonds issued by the state-owned Indian Renewable Energy Development Agency (IREDA) as 'long-term specified assets', granting them tax-exempt status under section 54EC of the Income-tax Act.

This significant development, effective from July 9, allows investors to save on Long Term Capital Gains (LTCG) tax, enhancing the appeal of these bonds. With an investment cap of Rs 50 lakh per financial year, these bonds are set to attract wider participation from investors keen on tax-saving opportunities.

The funds raised through these bonds will be used exclusively for renewable energy projects, thus bolstering the sector's financing landscape. By offering a lower cost of funds, IREDA aims to play a critical role in achieving India's target of 500 GW in non-fossil fuel capacity by 2030.

(With inputs from agencies.)