CBDT has notified Form 173A under the Income-tax (Seventh Amendment) Rules, 2026, requiring specified foreign institutional investors and the Bank for International Settlements to disclose government securities holdings, interest income and capital gains for claiming tax exemptions. The new requirement, effective 19 October 2026, applies to exemptions under Entries 13D and 13E of Schedule IV of the Income-tax Act, 2025, and does not extend these exemptions to ordinary investors.
The Central Board of Direct Taxes (CBDT) has introduced Form No. 173A, prescribing new disclosure requirements for specified foreign institutional investors and the Bank for International Settlements (BIS) claiming income-tax exemption on interest income and capital gains arising from government securities.
The amendment has been notified through Notification No. 137/2026, dated 19 October 2026, introducing the Income-tax (Seventh Amendment) Rules, 2026.
The new provisions aim to standardise the information furnished by eligible investors claiming exemptions under Schedule IV of the Income-tax Act, 2025.
1. CBDT Introduces New Rule 281A
Through the latest amendment, CBDT has inserted Rule 281A into the Income-tax Rules, 2026.
The rule requires eligible assessees to furnish information in Form 173A for claiming exemptions covered under Entries 13D and 13E of Schedule IV of the Income-tax Act, 2025.
The new requirement came into force on 19 October 2026, the date of publication in the Official Gazette.
2. Who Is Required to Furnish Form 173A?
The new requirement applies to two specified categories of eligible entities:
Foreign Institutional Investors (FIIs): Covered under Entry 13D of Schedule IV, subject to the applicable statutory definition and conditions.
Bank for International Settlements (BIS): Covered under Entry 13E of Schedule IV.
These exemptions concern specified income arising from eligible government securities.
Importantly, Form 173A does not provide a general tax exemption to all individuals, companies or investors holding government bonds, Treasury Bills or other government securities.
Ordinary investors must continue to determine the taxability of interest and capital gains under the provisions applicable to them.
3. What Income Is Covered?
The prescribed reporting requirements relate to the following categories of income from government securities:
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Interest received or accrued on eligible government securities.
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Capital gains arising from the sale of eligible government securities.
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Capital gains arising from their exchange or transfer.
The applicable exemption is subject to the relevant conditions under Schedule IV.
4. Details Required in Form 173A
The newly prescribed form is divided into two principal parts.
Part A — Basic Information
The eligible assessee is required to provide:
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Full name and country of residence.
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Address in the country of residence or headquarters.
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Permanent Account Number (PAN).
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Tax Identification Number (TIN) in the country of residence.
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SEBI registration number as an FPI or FII, where applicable.
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Tax year for which exemption is claimed.
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Email address and contact details.
The notification provides that TIN and SEBI registration number details are optional for BIS.
Part B — Details of Government Securities and Exempt Income
The assessee must furnish information regarding:
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International Securities Identification Number (ISIN).
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Type and tenor of government securities.
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Total value of securities held as on 1 April.
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Value of government securities purchased during the tax year.
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Sale consideration of securities sold.
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Total value of securities held as on 31 March.
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Gross interest received or accrued during the tax year.
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Capital gains earned during the tax year.
The form permits additional reporting entries wherever required.
5. Government Securities Covered in the Form
Form 173A specifies the following categories of government securities for reporting purposes:
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Treasury Bills.
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Fixed-rate bonds.
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Floating-rate bonds.
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State Development Loans (SDLs).
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Other government securities, with appropriate details.
The reporting requirement covers the relevant security-wise holdings, transactions and income for which the exemption is claimed.
6. Declaration by Principal Officer
Form 173A also contains a declaration requiring certification that the information furnished is true and consistent with the applicable provisions of Schedule IV.
The declaration is to be signed by the principal officer.
The prescribed values are required to be reported in Indian rupees unless otherwise specified.