The requirement was introduced through the Income-tax (Seventh Amendment) Rules, 2026, under a notification issued by the Ministry of Finance on October 19, 2026. Taxpayers seeking exemptions under Schedule IV of the Income-tax Act, 2025, must furnish the prescribed information in Form 173A.
The newly introduced Rule 281A requires taxpayers claiming exemptions under Table Serial Numbers 13D and 13E of Schedule IV to submit the form. The information required includes the investor’s full name, address, country of residence, Permanent Account Number (PAN), applicable tax year, email address and contact number.
The move follows the government’s June 6, 2026, notification announcing several measures to increase the participation of Foreign Portfolio Investors (FPIs) in government securities. These measures included expanding the specified securities covered under the Fully Accessible Route (FAR), simplifying investment standards and providing tax exemptions on interest income, long-term capital gains (LTCG) and short-term capital gains (STCG).
Before the latest amendment, Section 210 of the Income-tax Act, 2025, applied to foreign institutional investors (FIIs), including foreign portfolio investors registered with the Securities and Exchange Board of India (SEBI).
Under the new tax regime, eligible FPIs and FIIs investing in government securities will not be subject to tax on interest income earned from these securities or capital gains arising from their sale, transfer, exchange or redemption. The exemptions apply to income generated on or after April 1, 2026, for the eligible assessees.
The introduction of Form 173A establishes reporting requirements for investors seeking these exemptions. According to Jignesh Shah, Partner, Direct Tax, Bhuta Shah & Co LLP, the form is intended to standardise the reporting process and help tax authorities verify exemption claims against the government securities held, transactions undertaken and income earned during the relevant tax year.
The form is also intended to verify investor eligibility, establish security-wise records of holdings and transactions, facilitate the verification of exempt interest income and capital gains, and improve consistency, transparency and compliance in reporting.
However, filing Form 173A does not independently establish an investor’s entitlement to the exemption. Investors must satisfy the applicable statutory conditions in addition to meeting the prescribed reporting requirements.
Form 173A is divided into two parts. Part A captures the investor’s basic information, while Part B requires details of the exempt income claimed on government securities.
Part A requires the investor’s full name, country of residence, address in the country of residence or headquarters, PAN, Tax Identification Number (TIN) in the country of residence, SEBI registration number as an FPI or FII, tax year for which the exemption is claimed, email address and contact number.
Part B requires the International Securities Identification Number (ISIN), type of government security, tenor, total value of securities as of April 1, value of securities purchased during the year, sale consideration of securities sold during the year, total value of securities as of March 31, gross interest received or accrued during the tax year, and capital gains earned during the tax year.
The form also specifies certain requirements for completing these disclosures. The investor’s name must be provided in full, while the address must include the country or specified territory, flat, door or building number, road, street, block or sector, PIN or ZIP code, town, area or locality, district and state. All monetary amounts must be reported in rupees unless otherwise specified.
The details relating to the Tax Identification Number and SEBI registration number are optional for the Bank for International Settlements (BIS).
The categories of government securities covered by Form 173A include Treasury bills, fixed-rate bonds, floating-rate bonds, State Development Loans (SDLs) and other specified securities. Investors must furnish the relevant information for the securities covered by the form.
The reporting requirement applies only to specified categories eligible for exemption under Schedule IV. These include eligible foreign institutional investors, as defined under Section 201(6)(a) of the Income-tax Act, 2025, earning income from government securities, and the Bank for International Settlements, established at the Hague Conference in 1930 and headquartered in Basel, Switzerland, which also earns income from government securities.
Although the notification prescribes the form and its contents, it does not provide a detailed, step-by-step procedure for uploading or submitting it electronically.
Shah said the CBDT is expected to prescribe the electronic filing facility or issue filing instructions once the form is incorporated into the online filing portal.
Investors should keep their PAN and identification details, country of residence, overseas address, TIN and SEBI registration details, where applicable, ready before preparing the form. They should also maintain securities holding statements as of April 1 and March 31 of the relevant tax year, purchase and sale transaction statements containing ISIN-wise details, interest certificates or other records showing interest received or accrued, capital gains computations, supporting transaction records and authorisation details for the principal officer signing the declaration.
These documents are required to prepare and verify the disclosures. However, the notification does not require investors to upload supporting documents with the form.
The notification dated October 19, 2026, makes the requirement effective from the date of its publication in the Official Gazette. Neither the notification nor Rule 281A specifies a separate due date for filing Form 173A. Investors must therefore confirm the applicable filing procedure and timing before submitting the relevant income-tax return, while also checking for subsequent CBDT instructions or guidance issued through the filing portal.
Failure to comply with the prescribed reporting requirement could affect an investor’s ability to claim the exemption. Under entries 13D and 13E of Schedule IV of the Income-tax Act, 2025, the exemptions are subject to filing the prescribed form. If an eligible taxpayer fails to submit Form 173A, the tax authorities may seek to deny the exemption on the grounds of non-compliance with the prescribed procedures.
The introduction of Form 173A therefore adds a formal disclosure requirement for eligible foreign investors seeking tax relief on government securities, making accurate investment records and compliance with the applicable filing procedure important to substantiating exemption claims.
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