Centre grants tax benefits to Ireda bonds
The notification came into effect from 9 July, the ministry of new and renewable energy said on Thursday.
Bonds redeemable after five years and issued by Ireda after the notification will qualify for tax exemption under section 54EC of the Income Tax Act, 1961, which allows capital gains tax exemption on investments in specified bonds.
"Eligible investors can save tax on Long Term Capital Gain (LTCG) up to ₹ 50 lakh 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," the MNRE statement said.
It added that the proceeds from these bonds will be utilized exclusively for renewable energy projects capable of servicing debt through their project revenues, without dependence on state governments for debt servicing.
Pradip Kumar Das, chairman and managing director, Ireda, said: '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.'
The ministry, in its statement said that the move is expected to attract wider participation from investors seeking tax-saving instruments and strengthen the renewable energy financing ecosystem in the country.
The bonds of state-run Power Finance Corporation (PFC) and REC have already been granted the exemption, which is expected to boost investments in the renewable energy space.
In April this year, the Central Board of Direct Taxes, under the finance ministry also notified the bonds of Housing and Urban Development Corporation (Hudco) as long-term assets under Section 54EC of the Income Tax Act.
This relaxation is expected to boost financing in the green energy space as the government aims to achieve 500 GW of non-fossil installed power generation capacity by 2030. In April Ireda CMD Pradip Kumar Das had said at an event that India would require investments of about ₹ 30-32 trillion for energy transition by 2030.
For the fourth quarter of FY25, the state-run company recorded a 49% rise in standalone net profit to ₹ 502 crore as against ₹ 337 crore in the same period last year. On Thursday, the company announced in Q1FY26 results. Its net profit for the April-June quarter declined 35.1% to ₹ 246.68 crore in the compared to ₹ 383.7 crore in the same quarter of the previous year.
Its shares on the BSE closed at ₹ 169.65, higher by 2.26% from its previous close.
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