Overview: The Central Board of Direct Taxes (CBDT) has notified Form 173A under the Income-tax (7th Amendment) Rules, 2026. The form prescribes the information required from eligible Foreign Institutional Investors (FIIs) and the Bank for International Settlements (BIS) claiming specified tax exemptions on Government securities. The new reporting requirement took effect on 19 October 2026 under Rule 281A of the Income-tax Rules, 2026.
Foreign investors claiming specified tax exemptions on Indian Government securities must now furnish prescribed information about their investments and related income. The CBDT has introduced Form 173A to capture security holdings, purchases, sales, interest income and capital gains. Eligible claimants should review their investment records and tax documentation before submitting the form.
What Has CBDT Changed?
Through Notification No. 137/2026 (G.S.R. 901(E)), dated 19th October 2026, the CBDT introduced the Income-tax (7th Amendment) Rules, 2026. The amendment inserts Rule 281A into the Income-tax Rules, 2026, and adds Form 173A after Form 173.
Rule 281A requires an assessee claiming exemption under entries 13D and 13E of Schedule IV of the Income-tax Act, 2025, to furnish information in Form 173A. These entries cover specified exemptions on interest from Government securities and capital gains arising from their sale, exchange or transfer.
The exemptions and the reporting requirement have different effective dates. The underlying exemptions apply from 1st April, 2026, following the earlier amendment to Schedule IV. The new rules prescribing Form 173A took effect on 19th October, 2026, when the notification was published in the Official Gazette.
What Information Must Form 173A Contain?
Form 173A has two parts. Part A records the claimant’s identification and contact details, while Part B captures information about the Government securities and the income for which exemption is claimed.
Part A: Claimant details
The form requires the following information, as applicable:
- Full name of the claimant.
- Country of residence.
- Address in the country of residence or headquarters.
- Permanent Account Number (PAN).
- Tax Identification Number (TIN) in the country of residence.
- Securities and Exchange Board of India (SEBI) registration number as a Foreign Portfolio Investor (FPI) or Foreign Institutional Investor (FII).
- Tax year for which the exemption is claimed.
- Email address and contact number, including the country code.
The TIN and SEBI registration number are optional for the Bank for International Settlements (BIS). This relaxation applies only to these two specified particulars. BIS must still address the other applicable information requirements.
Part B: Government securities and exempt income
Claimants must report the prescribed details for each relevant security, including:
- International Securities Identification Number (ISIN).
- Type of Government security.
- Tenor of the security.
- Total value of securities held as on 1 April.
- Value of securities purchased during the year.
- Sale consideration of securities sold during the year.
- Total value of securities held as on 31 March.
- Gross interest received or accrued during the tax year.
- Capital gains earned during the tax year.
The form identifies Treasury Bills, fixed-rate bonds, floating-rate bonds, State Development Loans (SDLs) and other Government securities as reporting categories. Where a claimant holds several relevant securities, Part B can be repeated to provide the required details separately.
Amounts must be stated in Indian rupees unless otherwise provided. The principal officer must certify that the information is true to the best of their knowledge and belief and complies with the relevant provisions of Schedule IV of the Income-tax Act, 2025.
Who Can Claim the Exemption?
The provisions cover two specified categories under Schedule IV of the Income-tax Act, 2025.
1. Foreign Institutional Investors
Entry 13D covers Foreign Institutional Investors within the scope of the provision. The exemption applies to the specified interest income and capital gains from Government securities, subject to the applicable statutory conditions and information-filing requirement.
2. Bank for International Settlements
Entry 13E covers the Bank for International Settlements, an international financial institution headquartered in Basel, Switzerland. It provides the specified tax exemption for qualifying interest and capital gains from Government securities, subject to the applicable requirements.
These exemptions do not extend automatically to every investor holding Government securities. Claimants must fall within the relevant statutory category and comply with the conditions attached to the exemption.
What Should Eligible Claimants Check Before Filing?
Preparing Form 173A may require information from more than one source. Investment holdings may appear in custodian statements, while purchase and sale records, accrued interest and capital gains may be maintained separately by finance or tax teams.
The figures should agree before the principal officer signs the declaration. A difference between a custodian’s closing holdings and the accounting records, for example, should be investigated rather than carried into the form without explanation.
Eligible claimants should focus on three practical checks:
- Investment records: Match the ISIN, security category and tenor with the relevant holdings and transaction records. Reconcile the opening and closing values with the purchases and sales reported for the year.
- Income and tax records: Check gross interest received or accrued and capital gains against the underlying records and tax computations. Investigate differences in reporting periods or valuation figures before finalising the disclosure.
- Claimant details and certification: Verify the identification and contact details, confirm that the required information is complete, and resolve material discrepancies before the principal officer signs.
The notification prescribes the information to be furnished but does not, by itself, establish a separate calendar due date in the form. Claimants should check the applicable official filing instructions for the submission procedure and timeline.
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Form 173A addresses a separate and specific tax-reporting requirement for eligible FIIs and BIS. It should not be confused with routine FDI reporting by an Indian company. Where an investment structure involves several Indian regulatory obligations, the applicable corporate, foreign-investment and tax requirements should be identified separately and handled within the relevant scope of professional services.
FAQs
Form 173A prescribes the information required to claim specified tax exemptions on interest and capital gains from Government securities under entries 13D and 13E of Schedule IV of the Income-tax Act, 2025.
Eligible Foreign Institutional Investors covered by entry 13D and the Bank for International Settlements covered by entry 13E must furnish the prescribed information when claiming the relevant exemptions.
The form lists Treasury Bills, fixed-rate bonds, floating-rate bonds, State Development Loans and other Government securities. Claimants must provide the prescribed details for the relevant securities.
The Tax Identification Number in the country of residence and the SEBI registration number as an FPI/FII are optional for BIS. The relaxation is limited to these two particulars.
The Income-tax (7th Amendment) Rules, 2026, came into force on 19th October, 2026, the date of publication in the Official Gazette.
No. The underlying exemptions apply from 1st April, 2026. The notification dated 19th October, 2026, introduced the prescribed information-filing requirement.
No. It applies to claims under the specified entries 13D and 13E of Schedule IV. Other investors must assess their tax treatment under the provisions applicable to them.
Form 173A establishes a prescribed information-filing requirement for eligible FIIs and the Bank for International Settlements claiming specified tax exemptions on Government securities. Claimants should reconcile their holdings, transactions, interest income and capital gains before the principal officer certifies the information. They should also verify the applicable submission procedure and timeline. For foreign businesses operating through Indian entities, sound corporate records and consistent regulatory documentation remain important parts of ongoing compliance.
