CBDT Introduces Form 173A for Government Securities Tax Exemptions

The Central Board of Direct Taxes (CBDT) introduced Form 173A on 19 October 2026 for claims of income-tax exemptions on interest and capital gains from government securities. The form was prescribed under the Income-tax (Seventh Amendment) Rules, 2026, which came into force upon publication in the Official Gazette on the same date.

Exemption framework

Form 173A applies primarily to eligible foreign institutional investors (FIIs), foreign portfolio investors (FPIs) and the Bank for International Settlements (BIS). These investors use the form to claim exemptions under entries 13D and 13E of Schedule IV of the Income-tax Act, 2025. The specified income comprises interest and capital gains from government securities. The rules establish a prescribed reporting requirement for claims under these entries. Eligible investors must submit details relating to their identity, tax residence and securities holdings through Form 173A.

Government securities and covered instruments

Government securities are debt instruments issued by the Union Government or State Governments. They include Treasury bills, fixed-rate bonds, floating-rate bonds and State Development Loans (SDLs). Treasury bills are short-term government instruments, while bonds generally have longer tenors and may carry fixed or floating interest rates. SDLs are debt securities issued by State Governments. An International Securities Identification Number (ISIN) is used to identify a specific securities issue. Form 173A requires the ISIN and type of each government security to be reported.

Investor and transaction disclosures

The form requires the investor’s name, country of residence, Permanent Account Number (PAN) and tax identification number (TIN) issued by the country of residence. For each security, investors must provide its type, tenor and total value on 1 April and 31 March. Investors must also disclose purchases, sales, gross interest received and capital gains earned during the relevant period. These fields capture both holdings and income associated with the securities.

Important Facts for Exams

• The CBDT is a statutory authority under the Central Board of Revenue Act, 1963.
• The Income-tax (Seventh Amendment) Rules, 2026, brought Form 173A into effect on 19 October 2026.
• Form 173A relates to exemptions under entries 13D and 13E of Schedule IV of the Income-tax Act, 2025.
• State Development Loans are debt securities issued by State Governments.

Scope of reporting

Form 173A covers Treasury bills, fixed-rate bonds, floating-rate bonds and SDLs. Its prescribed fields include investor identification, security values, transactions, interest receipts and capital gains.