CBDT makes Form 173A mandatory to claim tax exemption on interest and gains from government securities

The Central Board of Direct Taxes (CBDT) has made it mandatory to furnish information in a new Form 173A to claim income-tax exemption on interest and capital gains from government securities.

The form has been added to the Income-tax Rules, 2026, through the Income-tax (Seventh Amendment) Rules, 2026, notified on October 19 under Notification No. 137/2026. The rules come into force on the date of their publication in the Official Gazette.

The amendment inserts a new rule, 281A, after rule 281. It says that, to claim exemption under Schedule IV (Table: Sl. Nos. 13D and 13E) of the Income-tax Act, 2025, the assessee must furnish information in Form 173A. The form is placed after Form 173.


Details sought in the form

Part A of the form asks for basic details. These are the name, country of residence, address in the country of residence or headquarters, Permanent Account Number (PAN), tax year for which the exemption is claimed, email address and contact number.

It also asks for the Tax Identification Number (TIN) in the country of residence and the SEBI registration number as a foreign portfolio investor (FPI) or foreign institutional investor (FII). These two details are optional for the Bank for International Settlements (BIS).

Part B seeks details of the exempt income claimed. The filer has to give the International Securities Identification Number (ISIN), the type of government security, and its tenor. The types listed are Treasury Bills, fixed rate bonds, floating rate bonds, State Development Loans (SDLs) and others.

The filer must also give the total value of securities held on April 1 and March 31, and the value of securities bought during the year. The form further asks for the sale consideration of securities sold during the year, the gross interest received or accrued in the tax year, and the capital gains earned in the tax year.

Amounts have to be filled in rupees unless otherwise provided. Part B can be repeated if required. The form ends with a declaration, signed by the principal officer, that the information is true to the best of the signatory’s knowledge and belief.

The Income-tax Act, 2025 came into force on April 1, 2026. The Income-tax Rules, 2026 were published in the Gazette of India on March 20, 2026.

Entries 13D and 13E were added to Schedule IV through the Income-tax (Amendment) Ordinance, 2026, promulgated on June 5. The ordinance took effect from April 1, 2026. Under these entries, any interest on government securities and any capital gains from their sale, exchange or transfer are exempt from tax.

Entry 13D covers foreign institutional investors, as defined in section 210(6)(a) of the Income-tax Act, 2025. Entry 13E covers the Bank for International Settlements, the institution established at the Hague Conference and based in Basel, Switzerland. The term government security carries the meaning given in section 2(f) of the Government Securities Act, 2006.

Form 173A now sets out the information that has to be furnished to claim the exemption under both entries.