CBDT notifies IREDA bonds under Section 54EC for capital gains exemption
With effect from 9 July 2025, CBDT notified bonds issued by IREDA as a 'long-term specified asset' under Section 54EC of the Income-tax Act, 1961.
Summary
The Central Board of Direct Taxes (CBDT) notified bonds issued by the Indian Renewable Energy Development Agency Ltd. (IREDA) as a 'long-term specified asset' under Section 54EC of the Income-tax Act, 1961, with effect from 9 July 2025, the Ministry of New and Renewable Energy said. IREDA bonds redeemable after five years and issued on or after the notification date will qualify, allowing investors to save tax on long-term capital gains of up to ₹50 lakh in a financial year. The proceeds will be used only for renewable energy projects able to service debt from their own revenues, without depending on state governments.
Key facts
- Notified by
- CBDT, effective 9 July 2025
- Provision
- Section 54EC, Income-tax Act, 1961 — 'long-term specified asset'
- Eligible bonds
- IREDA bonds redeemable after five years, issued on/after notification
- Tax benefit
- LTCG exemption on investment up to ₹50 lakh per financial year
- Use of funds
- Only for RE projects that can service debt from project revenues
Practice MCQs 3 questions
Under which section of the Income-tax Act, 1961 were IREDA bonds notified as a 'long-term specified asset' in July 2025?
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Correct answer: C — Section 54EC
MNRE: CBDT notified IREDA bonds as 'long-term specified asset' under section 54EC of the Income-tax Act, 1961.
Up to what amount of long-term capital gains in a financial year can investors save tax on by investing in the notified IREDA 54EC bonds?
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Correct answer: A — ₹50 lakh
MNRE: eligible investors can save tax on long-term capital gains up to ₹50 lakh by investing in these bonds in a financial year.
Consider the following statements about the IREDA 54EC bonds notified in July 2025: 1. The notification was issued by the Central Board of Direct Taxes. 2. Only bonds redeemable after five years qualify. 3. The proceeds can be used for any infrastructure project, including highways. Which of the statements given above is/are correct?
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Correct answer: B — 1 and 2 only
Statements 1 and 2 are correct. Statement 3 is wrong: the proceeds will be used exclusively for renewable energy projects that can service debt from their project revenues.