CBDT notifies new form for foreign investors to claim income tax relief on government securities

The Central Board of Direct Taxes (CBDT) has notified Form 173A for claiming income-tax exemption on interest and capital gains from government securities (G-Secs), setting out the information eligible investors must furnish under the Income-tax Rules, 2026.

The Income-tax (Seventh Amendment) Rules, 2026, notified on October 19, insert Rule 281A after Rule 281 and Form 173A after Form 173.

Why has the Government introduced the exemption?

Effective April 1, 2026, the exemption removes the applicable income tax on eligible interest and capital gains from G-Sec investments. The government said the measure aims to attract stable, long-term foreign capital. The new CBDT notification prescribes the reporting requirements for claiming this relief.

Form 173A requires investors to provide their full name, country of residence, address in their country of residence or headquarters, Permanent Account Number (PAN), Tax Identification Number (TIN) in their country of residence, SEBI registration number as an FPI/FII, tax year for which the exemption is claimed, email ID and contact number, including country code.

The address must include the country or specified territory, flat, door or building, road, street, block or sector, PIN or ZIP code, town, area or locality, district and state.

Investors must provide the International Securities Identification Number (ISIN), type and tenor of government securities, total value of securities as on April 1, value of securities purchased during the year, sale consideration of securities sold, total value of securities as on March 31, gross interest received or accrued during the tax year and capital gains earned during the year.

The form lists Treasury Bills, fixed-rate bonds, floating-rate bonds, State Development Loans (SDLs) and other securities. Part B may be repeated if required.

Declaration and reporting requirements

The form requires a declaration confirming that the information furnished is true to the best of the signatory's knowledge and belief and complies with Schedule IV, Table Sl. Nos. 13D and 13E of the Income-tax Act, 2025.

Amounts must be reported in rupees unless otherwise specified. The Tax Identification Number and SEBI registration number details are optional for BIS.

"Form 173A requires details such as the investor’s PAN and tax identification number, securities held and transactions made during the year, interest earned, and capital gains. However, individual investors do not need to file Form 173A simply because they invest in Government securities. The requirement applies only to entities covered under the specific exemptions provided in Schedule IV of the Income-tax Act, 2025," said CA Vertika Kedia, Co-founder, Tax2win.

When do the new rules take effect?

The Income-tax (Seventh Amendment) Rules, 2026, came into force on October 19, 2026, the date of publication in the Official Gazette. The notification was issued under No. 137/2026, F. No. 370142/35/2026-TPL, and signed by Kritika Jain, Under Secretary.