The Central Board of Direct Taxes (CBDT) has notified the Income-tax (Seventh Amendment) Rules, 2026, introducing a new disclosure requirement for taxpayers claiming exemption on interest and capital gains earned from government securities. The amendment introduces Form 173A, which specifies the information required to claim exemptions under Schedule IV, Table entries 13D and 13E of the Income-tax Act, 2025.
The notification, issued by the Ministry of Finance under Notification No. 137/2026, was published in the Gazette of India on 19 October 2026. The amended rules will come into force from the date of their publication in the Official Gazette.
CBDT Inserts New Rule 281A
The amendment inserts Rule 281A into the Income-tax Rules, 2026, after Rule 281. Under the new provision, taxpayers seeking exemption under Schedule IV, Table entries 13D and 13E of the Income-tax Act, 2025, are required to furnish the prescribed information in Form 173A.
The new rule establishes a specific reporting requirement for claiming the relevant exemptions on income arising from government securities.
Form 173A: Details Required for Claiming Exemption
Form 173A has been introduced to collect information relating to exempt interest income and capital gains from government securities. The form is divided into two parts.
Part A: Basic Information
The taxpayer must provide the following details:
- Full name of the taxpayer or entity
- Country of residence
- Address in the country of residence or headquarters
- Permanent Account Number (PAN)
- Tax Identification Number (TIN) in the country of residence
- SEBI registration number as a Foreign Portfolio Investor (FPI) or Foreign Institutional Investor (FII)
- Tax year for which the exemption is claimed
- Email address and contact number, including the country code
The form also specifies that the TIN and SEBI registration details are optional for the Bank for International Settlements (BIS).
Part B: Details of Government Securities and Exempt Income
The second part requires information about the government securities in respect of which the exemption is being claimed. The prescribed particulars include:
- International Securities Identification Number (ISIN)
- Type of government security
- Tenure of the security
- Total value of securities as on 1 April
- Value of securities purchased during the tax year
- Sale consideration of securities sold during the tax year
- Total value of securities as on 31 March
- Gross interest received or accrued during the tax year
- Capital gains earned during the tax year
The form covers Treasury Bills, fixed-rate bonds, floating-rate bonds, State Development Loans (SDLs) and other government securities.
Where necessary, the details of additional securities can be repeated in the prescribed format.
Declaration and Reporting Requirements
Form 173A includes a declaration confirming that the information furnished is true to the best of the declarant's knowledge and belief and is consistent with the relevant provisions of Schedule IV of the Income-tax Act, 2025.
The form must also include the date, place, signature and name of the principal officer, as applicable.
The notification specifies that amounts should be reported in Indian rupees unless otherwise provided. It also lays down detailed address requirements, including the country or specified territory, building details, street or sector, PIN or ZIP code, locality, district and state.
When Will the Amendment Take Effect?
The Income-tax (Seventh Amendment) Rules, 2026, will take effect from the date of their publication in the Official Gazette. The notification is identified as No. 137/2026, File No. 370142/35/2026-TPL.
The amendment further modifies the Income-tax Rules, 2026, which were originally notified through G.S.R. 198(E) dated 20 March 2026.
What Should Taxpayers and Tax Professionals Note?
Taxpayers claiming the specified exemptions on interest and capital gains from government securities should take note of the newly prescribed Form 173A and the information it requires. Tax professionals advising eligible investors, including relevant foreign investors, should review the applicable Schedule IV provisions and ensure that the prescribed particulars are available when preparing the exemption claim.
The notification introduces a specific information-furnishing requirement. It does not, by itself, set out a new exemption rate or independently establish eligibility for exemption beyond the provisions referenced in the Income-tax Act, 2025.
Official Notification has been attached below
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