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Power Ministry issues Tax on Green Bonds

Published on January 27, 2023
Current Context: The Government of India has implemented the use of green bonds as a means to develop the clean energy sector within the country.
Power Ministry issues tax on green bonds
  • These bonds serve as a type of loan security and are typically tax-free to incentivise more green projects. However, the Power Ministry recently proposed imposing taxes on these bonds.
  • This change would require investors to file an Income Tax Return for their bond-derived income and see the Power Finance Corporation act as the main agency for climate financing.
  • Taxes on income from sources other than a profession or company are included in ITR-w. Green bonds typically don't pay taxes. This is done to increase green energy initiatives and industries. PFC is a public sector unit and the power sector’s backbone.
  • The goal of this proposed change aims to increase investment in renewable energy and work towards India's goal of reaching 500 GW of non-fossil fuel by 2030 and becoming a zero-carbon-emitting country by 2070.


Q.1 Which ministry is proposing tax-paid bonds?
a. Ministry of Commerce
b. Finance Ministry
c. Ministry of foreign affairs
d. Ministry of power
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