Foreign institutional investors and the Bank for International Settlements must now file Form 173A, detailing their government securities holdings and related income, to claim exemptions on interest and capital gains.
The Central Board of Direct Taxes has made a new disclosure form compulsory for certain foreign investors and the Bank for International Settlements when claiming tax relief on government securities, tightening the paperwork needed to access exemptions on interest and capital gains.
According to the Income-tax (Seventh Amendment) Rules, 2026, which took effect on October 19, Form 173A is now required for claims under entries 13D and 13E of Schedule IV of the Income-tax Act, 2025. Those provisions apply to foreign institutional investors and the BIS, and the relief is limited to income from government securities, not to ordinary investors. The Economic Times and Business Standard both reported that the new filing requirement is intended to standardise exemption claims and give tax authorities more detail on the underlying holdings.
The form asks for basic identification details, including the applicant’s name, country of residence, address, tax identification number, email address and contact number, along with Permanent Account Number where applicable. It also seeks the Securities and Exchange Board of India registration number for foreign portfolio or institutional investors, although that is optional for the BIS. The return must also set out the securities involved, including the International Securities Identification Number, type and tenor, as well as information on Treasury bills, fixed-rate bonds, floating-rate bonds and State Development Loans.
Further disclosures include the value of securities held at the start and end of the tax year, purchases made during the year, sale proceeds, interest received or accrued and capital gains realised. The information must be reported in rupees unless another currency is specifically allowed, and the declaration must be signed by the principal officer. KNN said the amendment inserts a new Rule 281A into the Income-tax Rules, 2026, while placing Form 173A after Form 173.
The rules were published in the Official Gazette and came into force immediately upon publication. KNN noted that the Income-tax Act, 2025, and the Income-tax Rules, 2026, had already taken effect on April 1, 2026, while the exemptions for entries 13D and 13E were introduced earlier through the Income-tax (Amendment) Ordinance, 2026, with effect from April 1.
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