In a move aimed at boosting low-cost fundraising for the renewable energy sector, the central government has accorded tax-saving status to bonds issued by the Indian Renewable Energy Development Agency (Ireda) under Section 54EC of the Income Tax Act.The Central Board of Direct Taxes (CBDT) has notified Ireda bonds as ‘long-term specified assets’, allowing investors to claim capital gains tax exemptions by investing in them. The notification, issued under the Ministry of Finance, came into effect from July 9, 2025, according to a statement released by the Ministry of New and Renewable Energy (MNRE) on Thursday, reported ANI.As per the notification, bonds issued by Ireda on or after the effective date, and redeemable after five years, will qualify for the exemption under Section 54EC. The provision allows investors to save tax on Long Term Capital Gains (LTCG) up to Rs 50 lakh in a financial year, provided the gains are reinvested in these specified bonds.“The proceeds from these bonds will be utilised exclusively for renewable energy projects capable of servicing debt through their project revenues, without dependence on State Governments for debt servicing,” the MNRE said.Welcoming the announcement, Pradip Kumar Das, Chairman and Managing Director of Ireda, said, “We are deeply grateful to the Ministry of Finance, Ministry of New & Renewable Energy and Central Board of Direct Taxes for this valuable policy initiative.”He added, “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 tax benefit is expected to attract wider investor participation and further strengthen India’s renewable energy financing ecosystem.India had pledged ambitious targets at COP26 in 2021, including achieving 500 GW of non-fossil fuel capacity, meeting half of its energy requirements from renewables, reducing emissions by one billion tonnes by 2030, and reaching net-zero emissions by 2070.