The Central Board of Direct Taxes (CBDT) has notified that bonds issued by the Housing and Urban Development Corporation Limited (HUDCO), redeemable after five years and issued on or after April 1, 2025, will be treated as “long-term specified assets” under section 54EC of the Income-tax Act, 1961.

This notification enables taxpayers to claim capital gains exemption by investing in these HUDCO bonds, provided other conditions under section 54EC are fulfilled.

The bonds are to be issued by HUDCO, a public financial institution recognized under section 2(72) of the Companies Act, 2013. Crucially, the proceeds from these bonds must be utilized solely for infrastructure projects that are capable of servicing the associated debt from project revenues, without reliance on State Government support.

The definition of “infrastructure” for this purpose refers to the sub-sectors listed in the Updated Harmonised Master List of Infrastructure sub-sectors notified by the Department of Economic Affairs, Ministry of Finance, on October 11, 2022 (Notification No. 262), including any future amendments or additions.

Notification Details

Notification No. 31/2025

Date: 07/04/2025

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