CBDT Notifies Form 173A: New Mandatory Reporting for Tax Exemption on Interest and Capital Gains from Government Securities
The Central Board of Direct Taxes (CBDT) has notified the Income-tax (Seventh Amendment) Rules, 2026 vide Notification No. 137/2026 (F. No. 370142/35/2026-TPL), dated 19 October 2026, inserting new Rule 281A and a new Form 173A in the Income-tax Rules, 2026.
What Rule 281A Says
New Rule 281A provides that an assessee claiming exemption under Sl. Nos. 13D (interest on government securities) or 13E (capital gains on transfer of government securities) of the Table in Schedule IV of the Income-tax Act, 2025 shall furnish Form 173A with the prescribed particulars. The word "shall" makes this a mandatory condition — not an optional disclosure.
Structure of Form 173A
Form 173A, inserted after Form 173, is divided into two parts:
Part A — Assessee Identity
- Name of the assessee
- Country of residence
- Address
- Permanent Account Number (PAN)
- Tax Identification Number (TIN) in country of residence
- SEBI registration number (for FPIs/FIIs)
- Tax year
- Email address and contact details
Part B — Per-Security Details
For each government security held or transacted, the form requires:
- ISIN (International Securities Identification Number)
- Type of security
- Tenor
- Value as on 1 April and 31 March of the tax year
- Purchases made during the year
- Sale consideration
- Gross interest received
- Capital gains computed
Who Is Affected?
The form mainly affects non-resident investors — Foreign Portfolio Investors (FPIs), Foreign Institutional Investors (FIIs) and similar claimants — since it asks for country of residence, TIN, and SEBI registration number. Entities such as the Bank for International Settlements (BIS) find the TIN and SEBI-registration fields optional, reflecting their treaty-based status.
Effective Date
The Seventh Amendment Rules — and therefore Rule 281A and Form 173A — came into force on the date of their publication in the Official Gazette, i.e. 19 October 2026.
What Should Taxpayers and Advisors Do?
- Identify affected clients: any non-resident or resident assessee claiming Schedule IV (13D/13E) exemption on G-sec interest or capital gains.
- Compile per-ISIN data early: holdings as on 1 April / 31 March, purchases, sales, interest and gains — the form demands security-level granularity.
- Keep TIN and SEBI registration handy: FPIs/FIIs must quote both.
- Build Form 173A into the return-preparation checklist for AYs in which the exemption is claimed, so no claim fails for want of the form.
Bottom Line
CBDT's Notification No. 137/2026 does not create a new tax break — it creates a new gate for an existing one. From 19 October 2026, exemption on interest and capital gains from government securities under Schedule IV (13D/13E) of the Income-tax Act, 2025 runs through Form 173A. Advisors should treat the form as a mandatory attachment to every such claim.
Source: Gazette of India (Extraordinary), Part II, Section 3(i) — G.S.R. 901(E), CBDT Notification No. 137/2026 dated 19.10.2026. Reported by The Economic Times and BusinessLine (ANI) on 20 October 2026.