From Financialexpress · Mithilesh Jha · · 2m
New tax benefit for government bonds: Who qualifies?
Foreign investors must file Form 173A to claim tax exemptions on Indian government securities interest and capital gains.
In brief
Foreign investors must file Form 173A to claim tax exemptions on Indian government securities interest and capital gains. Eligible foreign institutional investors and Bank for International Settlements can claim tax exemptions on government securities interest and capital gains by filing Form 173A. Originally reported…
New tax benefit on government bonds
The Central Board of Direct Taxes has notified Form 173A for eligible foreign investors claiming tax exemption on interest and capital gains from government securities.
Form 173A details
The form specifies the details investors must disclose including securities held, transactions, interest income and capital gains.
Who needs to file Form 173A
The new form applies to claims covered by entries 13D and 13E of Schedule IV of the Income-tax Act, 2025.
Form 173A requirements
Investors must provide details about their identity, government securities held, transactions during the tax year, interest income and capital gains.
Specific details for investors
Part A asks for the investor’s full name, country of residence, address, PAN, TIN, SEBI registration number, tax year, email and contact number.
Government securities details
Part B requires information about the ISIN, type of security, tenor, value of securities held, purchases, sales, interest and capital gains.
Why report separately
Interest and capital gains are different types of income; the form requires both to identify the income covered by the exemption.
Declaration required
The form contains a declaration that the information provided is true to the best of the signatory’s knowledge and belief.
Who qualifies for exemption
Entry 13D covers eligible foreign institutional investors in respect of specified interest income and capital gains from government securities.
Bank for International Settlements
Entry 13E covers the Bank for International Settlements subject to the conditions in the law.
When rules take effect
The Income-tax (Seventh Amendment) Rules, 2026 came into force on October 19, 2026, the date of publication in the Official Gazette.
Key takeaway
Form 173A is a reporting requirement for specified tax-exemption claims on government securities for eligible foreign institutional investors and the Bank for International Settlements.
What to remember
Eligible foreign institutional investors and Bank for International Settlements can claim tax exemptions on government securities interest and capital gains by filing Form 173A.
