The government's decision to permit Indian Renewable Energy Development Agency Ltd. (Ireda) to raise capital through tax-saving 54EC bonds, also referred to as capital gains bonds, is expected to put the company's shares in the public eye on Thursday.
Ireda's bonds will now be regarded as a "long-term specified asset" under Section 54EC of the Income-tax Act, 1961, according to a notification from the Central Board of Direct Taxes (CBDT). This implies that individuals who sell real estate or generate long-term capital gains can invest up to ₹50 lakh in these bonds during a fiscal year and avoid paying taxes.
Key Highlights
- Centre approves IREDA bonds under Section 54EC, enabling capital-gains exemption and supporting renewable energy fundraising.
- IREDA shares rose ~1.75% after nod; funds raised must support self-sustaining green energy projects.
This notice is effective July 9. Bonds issued on or after this date will have a five-year lock-in period. Though they have a lower interest rate of 5.25%, the main attraction is the tax exemption under Section 54EC.
The funds raised through these bonds will only be used for renewable energy projects that can repay loans with their own revenues, rather than relying on state governments. This approval gives Ireda access to cheaper funds, which can help boost financing for clean energy in the country.
Other bonds eligible for exemption under Section 54EC of the Income Tax Act include those issued by Rural Electrification Corporation Limited (REC), National Highway Authority of India (NHAI), Power Finance Corporation Limited (PFC), and Indian Railway Finance Corporation Limited (IRFC). With Ireda now included on this list, investors have another way to save money while supporting green energy initiatives.
Also Read: Ireda Secures Over Rs 2,000 Cr Thru QIP from Domestic and Foreign Investors
Pradip Kumar Das, chairman and managing director of Ireda, welcomed the move, describing it as a boost for renewable energy financing and a step toward India's goal of 500GW of non-fossil fuel capacity by 2030.
The decision is expected to attract more investors looking for tax breaks and increase the flow of money into the renewable energy sector.
