HUDCO Bonds Now Eligible for Capital Gains Tax Exemption u/s 54EC: CBDT [Read Notification]
The Ministry of Finance has notified HUDCO bonds as eligible for capital gains tax exemption under Section 54EC of the Income Tax Act
![HUDCO Bonds Now Eligible for Capital Gains Tax Exemption u/s 54EC: CBDT [Read Notification]](https://www.taxscan.in/wp-content/uploads/2025/04/HUDCO-HUDCO-Bonds-Eligible-for-Capital-Gains-Tax-Capital-Gains-Tax-Capital-Gains-Capital-Gains-Tax-Exemption-taxscan.jpg "HUDCO Bonds Now Eligible for Capital Gains Tax Exemption u/s 54EC: CBDT [Read Notification]")
The Central Board of Direct Tax (CBDT) under the Ministry of Finance issued Notification No. S.O. 1644(E) dated April 7, 2025, officially declares that certain bonds issued by Housing and Urban Development Corporation Limited (HUDCO) will be treated as long-term specified assets under Section 54EC of the Income Tax Act, 1961. According to the notification, HUDCO bonds issued on or after...
The Central Board of Direct Tax (CBDT) under the Ministry of Finance issued Notification No. S.O. 1644(E) dated April 7, 2025, officially declares that certain bonds issued by Housing and Urban Development Corporation Limited (HUDCO) will be treated as long-term specified assets under Section 54EC of the Income Tax Act, 1961.
According to the notification, HUDCO bonds issued on or after April 1, 2025, and redeemable after five years, will qualify for the exemption. Section 54EC of the Income Tax Act allows individuals and entities to save on long-term capital gains tax if they reinvest the gains into notified bonds within six months of the asset transfer.
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The notification also specifies that the funds raised through the issuance of these bonds must be utilized exclusively for infrastructure projects that are self-revenue-generating. In other words, the projects must be financially sustainable and capable of repaying debt from their own income, without relying on State Government guarantees or budgetary support.
The term “infrastructure” will follow the scope defined in the Updated Harmonised Master List of Infrastructure Sub-sectors, issued by the Department of Economic Affairs via Notification No. 262 dated October 11, 2022. Any subsequent amendments to this master list will automatically apply to HUDCO’s bond usage as well.
HUDCO, a public sector financial institution under the Companies Act, 2013, now joins the list of entities whose bonds qualify for 54EC exemption, providing taxpayers a new route to legally reduce capital gains tax liability while simultaneously contributing to India’s infrastructure development goals.
To Read the full text of the Order CLICK HERE
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