CBDT has proposed a new rule and form for eligible investors claiming exemption on interest and capital gains from Indian government securities. The Income Tax Department lists it as the proposed Income-tax (Seventh Amendment) Rules, 2026 (No. 137/2026). Treat it as not final until the rules are notified in the Gazette with a date.
What is proposed
- A new Rule 281A: to claim exemption under Schedule IV (Table: Sl. Nos. 13D and 13E) of the Income-tax Act, 2025, the assessee must furnish information in Form No. 173A.
- A new Form No. 173A: "Information to be furnished for claiming exemption on interest and capital gains from Government securities."
What Form 173A asks for
Part A: basic information
- name, country of residence, address there, PAN
- Tax Identification Number (TIN) in the country of residence
- SEBI registration number as FPI/FII
- tax year of the claim, email and contact number
The TIN and SEBI registration fields are optional for the Bank for International Settlements (BIS).
Part B: exempt income on each security
- ISIN and type of security: Treasury Bills, fixed-rate bonds, floating-rate bonds, State Development Loans (SDLs) or others
- tenor
- holding value on 1 April, purchases and sales during the year, holding value on 31 March
- gross interest received or accrued, and capital gains for the tax year
The form ends with a declaration signed by the principal officer.
Who is affected
Foreign portfolio investors and similar entities eligible under the Schedule IV entries, which typically means investors in Indian government debt.
What to do now
Track the final notification. Meanwhile, make sure your custodian can produce ISIN-level holdings, interest and gains data for each tax year, which is exactly what Form 173A asks for.
