CBDT notifies Form 173A for government securities: New tax exemption rules for eligible foreign investors
The Central Board of Direct Taxes (CBDT) has made it mandatory for eligible foreign investors and the Bank for International Settlements (BIS) to submit Form 173A to claim income-tax exemptions on interest and capital gains from government securities. The requirement was introduced through the Income-tax (Seventh Amendment) Rules, 2026, notified on 19 October.
The new form lays down the information that eligible investors must furnish to claim exemptions under entries 13D and 13E of Schedule IV of the Income-tax Act, 2025. The amended rules came into force upon publication in the Official Gazette. The exemptions apply to qualifying income from government securities, subject to the conditions prescribed under the Act.
The change does not introduce a tax exemption for all government bond investors. It sets out the reporting requirements for investors seeking specific exemptions under the law.
The provisions cover specified foreign institutional investors (FIIs) under entry 13D and the Bank for International Settlements under entry 13E of Schedule IV. The exemptions relate to eligible interest income and capital gains arising from the sale, exchange or transfer of government securities.
For ordinary retail investors who buy government bonds or Treasury Bills, the new form does not create an additional tax benefit. Its requirements concern entities eligible for the specified exemptions.
Form 173A has two parts, covering basic information about the claimant and details of income earned from government securities.
The first part requires the investor's name, country of residence, address, Permanent Account Number (PAN), tax year, email address and contact number. It also seeks the tax identification number issued by the investor's country of residence and the Securities and Exchange Board of India registration number as an FPI or FII, where applicable. The tax identification number and SEBI registration details are optional for BIS.
The second part requires security-wise details of the investments for which the exemption is claimed. These include the International Securities Identification Number (ISIN), type and tenor of the security, and the value of holdings at the beginning and end of the tax year.
Investors must also report the value of securities purchased during the year, sale consideration for securities sold, gross interest received or accrued, and capital gains earned during the relevant tax year. The form lists Treasury Bills, fixed-rate bonds, floating-rate bonds and State Development Loans (SDLs), among other government securities.
The form also requires a declaration confirming the accuracy of the information furnished and compliance with the applicable provisions of Schedule IV. The declaration must be signed by the principal officer.
The new form provides a prescribed reporting mechanism for claiming the specified exemptions. By requiring details of individual securities, holdings, interest and capital gains, the rules establish the information eligible investors must submit to support their claims.
The exemption provisions apply to qualifying income arising on or after 1 April 2026, subject to the relevant statutory conditions. The introduction of Form 173A specifies the documentation required to claim these benefits; it does not extend them to investors who do not qualify under the relevant entries of Schedule IV.
The notification was issued as part of the Income-tax (Seventh Amendment) Rules, 2026, which amend the Income-tax Rules, 2026, by inserting Rule 281A and Form 173A.
Kirti jha
Kirti Jha is a Senior Content Producer at Mint, where she writes on mutual funds, taxation, personal finance and macroeconomic developments. Her reporting focuses on helping readers understand complex financial developments through data-driven, research-backed stories that explain how policy changes, market trends and regulatory decisions affect investors and households. <br><br> Before joining Mint, Kirti worked at ET Money, where she specialised in mutual fund research and investment analysis. She tracked portfolio disclosures, fund manager strategies, sectoral allocation shifts and investment trends, distilling large datasets into investor-focused insights. Her work combined quantitative analysis with consumer-centric storytelling, enabling readers to better understand fund positioning, portfolio changes and long-term investment opportunities.<br><br> Kirti holds a Bachelor's degree in Economics from Indraprastha College for Women, University of Delhi, and a Master's in Finance from the Jindal School of Banking & Finance at O.P. Jindal Global University. Her academic training emphasised analytical thinking, quantitative research and financial decision-making, providing a strong foundation in understanding capital markets, financial systems and economic policy. With a combined experience in investment research and financial journalism, she is committed to producing accurate, accessible and insightful journalism that empowers readers to make well-informed financial decisions.
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