CBDT notifies Form 173A as mandatory for claiming tax exemption on interest and capital gains from government securities

Key facts

• 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.
• Form 173A was added to the Income-tax Rules, 2026, through the Income-tax (Seventh Amendment) Rules, 2026, notified on October 19 under Notification No. 137/2026, and the rules came into force on the date of their publication in the Official Gazette.
• The amendment inserts a new rule 281A, requiring assessees to furnish Form 173A to claim exemption under Schedule IV (Sl. Nos. 13D and 13E) of the Income-tax Act, 2025.
• Part A of Form 173A seeks details including name, country of residence, address, PAN, tax year, email and contact number, along with the Tax Identification Number (TIN) and SEBI registration number as an FPI or FII, which are optional for the Bank for International Settlements (BIS).
• Part B of Form 173A requires details of exempt income claimed, including ISIN, type of government security (Treasury Bills, fixed rate bonds, floating rate bonds, State Development Loans and others), tenor, securities values on April 1 and March 31, purchase value, sale consideration, gross interest and capital gains, ending with a declaration signed by the principal officer.
• The Income-tax Act, 2025 came into force on April 1, 2026, and 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 and effective from April 1, 2026, exempting interest on government securities and capital gains from their sale, exchange or transfer.
• Entry 13D covers foreign institutional investors as defined in section 210(6)(a) of the Income-tax Act, 2025, while Entry 13E covers the Bank for International Settlements, based in Basel, Switzerland.