CBDT Notifies IREDA Bonds as Eligible for Section 54EC Exemption
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- Last Updated on 11 July, 2025
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Notification No. 73/2025, dated 09-07-2025
The Central Board of Direct Taxes (CBDT) has officially notified the Indian Renewable Energy Development Agency (IREDA) as a long-term specified asset for the purposes of Section 54EC of the Income-tax Act, 1961. This move provides taxpayers with an additional avenue for capital gains exemption under the said section.
1. Eligibility Criteria for IREDA Bonds under Section 54EC
As per the notification, the following conditions must be fulfilled for IREDA bonds to qualify as long-term specified assets:
- The bonds must be issued by IREDA.
- They must be redeemable after five years.
- The bonds must be issued on or after 09-07-2025.
Only those bonds that meet all the above criteria will be eligible for capital gains exemption under Section 54EC.
2. Use of Proceeds – Restricted to Self-Sustaining Renewable Projects
A key stipulation in the notification pertains to the utilisation of proceeds from the bond issuance. The CBDT has mandated that:
- The funds raised through these bonds must be used by IREDA only for renewable energy projects.
- Such projects should be capable of servicing the debt from their own revenues.
- These projects must not rely on any financial assistance or guarantees from State Governments for debt servicing.
This ensures that the tax benefit is linked to financially viable and self-sustaining renewable energy initiatives.
3. Implications for Taxpayers
Investors who earn capital gains and wish to claim exemption under Section 54EC can now consider IREDA bonds (issued post 09-07-2025) as an eligible investment. By doing so, they can defer their tax liability while supporting the development of sustainable energy infrastructure in India.
Click Here To Read The Full Notification
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