Income Tax 7th Amendment Rules 2026: Form 173A Notified

The Income-tax (Seventh Amendment) Rules, 2026 introduce Form No. 173A for furnishing information connected with a specified exemption on income from Government securities. The requirement applies to eligible Foreign Institutional Investors (FIIs) and the Bank for International Settlements (BIS) when they claim the exemption under the relevant provisions of the Income-tax Act, 2025.

The form asks for details about the claimant, Government securities held, interest income and capital gains. Eligible investors should therefore review both their entitlement to the exemption and the accuracy of the information they furnish. The amendment was issued through Notification No. 137/2026, dated 19 October 2026, and came into force on its publication in the Official Gazette. It inserts Rule 281A into the Income-tax Rules, 2026 and introduces Form No. 173A.

Overview of the Seventh Amendment Rules

The Seventh Amendment Rules introduce a reporting requirement for taxpayers claiming exemption under serial numbers 13D and 13E of the table in Schedule IV of the Income-tax Act, 2025. These entries deal with interest and capital gains arising from Government securities in the hands of specified eligible persons.

Rule 281A provides that an assessee claiming the exemption under either entry must furnish information in Form No. 173A. The exemption and the form serve different purposes. Schedule IV identifies the eligible persons, covered income and applicable condition, while Rule 281A prescribes the form in which the relevant information is to be furnished.

What Is Form No. 173A?

Form No. 173A is an information form for a person claiming the specified exemption on interest and capital gains from Government securities. It collects basic details about the claimant as well as security-wise investment and income information. The form is divided into two parts. Part A covers information about the assessee, including its name, country of residence, tax identification details and contact information.

Part B covers details of the Government securities and the exempt income claimed. The form also contains a declaration in which the principal officer certifies that the information is true to the best of their knowledge and belief and is in accordance with the relevant Schedule IV provisions.

Legal Provisions Applicable to Form 173A

Income-tax Act, 2025

The exemption addressed by Form 173A is contained in Schedule IV of the Income-tax Act, 2025. The relevant entries specify the categories of eligible persons and the types of income that may be excluded from total income, subject to furnishing information in the prescribed form and manner. Serial number 13D concerns a Foreign Institutional Investor, while serial number 13E concerns the Bank for International Settlements. Both entries cover interest on Government securities and capital gains arising from their sale, exchange or transfer.

Rule 281A of the Income-tax Rules, 2026

Rule 281A establishes the reporting requirement for a person claiming exemption under the two Schedule IV entries. It states that the assessee must furnish information in Form No. 173A for the purpose of claiming the exemption. Maintaining investment records alone is therefore not a substitute for the prescribed information-furnishing requirement. At the same time, submitting the form does not by itself establish that every amount reported is eligible for exemption.

Effective Date

The Seventh Amendment Rules came into force on 19 October 2026, the date of their publication in the Official Gazette. The Schedule IV entries themselves were inserted with effect from 1 April 2026. The fact that the form was notified later does not, by itself, resolve every question about applying the exemption or furnishing information for transactions occurring before the notification. Investors should examine the applicable law and any subsequent guidance for their circumstances.

Who Needs to Consider Form 173A?

Foreign Institutional Investors

A Foreign Institutional Investor claiming exemption under serial number 13D of Schedule IV must consider the Form 173A requirement. The Schedule refers to the meaning assigned to “Foreign Institutional Investor” under section 210(6)(a) of the Income-tax Act, 2025.

Although the form includes a field for a SEBI registration number as an FPI or FII, the presence of that field does not mean that every foreign portfolio investor automatically qualifies for the exemption. The investor’s eligibility must be assessed under the relevant statutory definition and applicable facts.

Bank for International Settlements

The Bank for International Settlements may need to furnish Form 173A when claiming the exemption under serial number 13E of Schedule IV. The form provides a specific relaxation for BIS: the fields for the tax identification number in the country of residence and the SEBI registration number as an FPI or FII are optional for it. This relaxation should not be assumed to apply to other claimants.

Are Individual Investors Covered?

The relevant Schedule IV entries identify FIIs and BIS as the eligible persons. An individual investor, including a non-resident individual, should not assume that they qualify under these entries merely because they invest in Indian Government securities. Other exemptions, treaty provisions or tax rules may apply to a particular investor, but those require a separate assessment based on the investor’s status, income and circumstances.

What Income Is Covered by the Exemption?

Interest on Government Securities

The relevant Schedule IV entries cover interest on Government securities received by an eligible claimant, subject to the prescribed information-furnishing requirement. For reporting purposes, Form 173A asks for the gross amount of interest received or accrued during the tax year. Investors should reconcile the amount reported against their investment and income records and assess the correct tax treatment for the relevant year.

Capital Gains on Sale, Exchange or Transfer

The entries also cover capital gains arising from the sale, exchange or transfer of Government securities. Form 173A asks for capital gains earned during the tax year, along with the sale consideration of securities sold during the year.

Sale consideration and capital gains are different figures. Sale consideration is generally the amount received on sale, while the capital gain requires a calculation under the applicable tax provisions. An investor should retain supporting calculations and transaction records for the amount claimed.

Meaning of Government Security

For the relevant Schedule IV entries, “Government security” has the meaning assigned under section 2(f) of the Government Securities Act, 2006. Investors should check whether each instrument falls within that definition before including its income in an exemption claim.

The form lists categories such as Treasury Bills, fixed-rate bonds, floating-rate bonds and State Development Loans, along with an “others” category. Selecting a category in the form should be supported by an assessment that the particular instrument qualifies under the applicable law.

Information Required in Part A of Form 173A

Part A asks for basic information about the person claiming the exemption. These details help identify the claimant and the tax year to which the information relates.

• Name and Country of Residence: The claimant must provide its full name and country of residence. The name should be consistent with the claimant’s tax and registration records to reduce the risk of identification or reconciliation issues.

• Address in the Country of Residence or Headquarters: The form asks for the address in the country of residence or headquarters. Its notes indicate that the address should include the relevant building, street, locality, district, state, country or specified territory, and PIN or ZIP code details. The claimant should check that the address is complete and consistent with its current records.

• Permanent Account Number: The form contains a field for the claimant’s Permanent Account Number (PAN). The PAN entered should be checked carefully against the relevant Indian tax records.

• Tax Identification Number and SEBI Registration Number: The form asks for the claimant’s tax identification number in its country of residence and its SEBI registration number as an FPI or FII. As noted above, these two details are optional for BIS. Other claimants should review their registration and tax identification records when completing these fields rather than assuming the BIS relaxation applies to them.

• Tax Year and Contact Details: The claimant must identify the tax year for which the exemption is claimed and provide an email address and contact number, including the country code. For example, the 2026–27 tax year runs from 1 April 2026 to 31 March 2027. The relevant year should be selected after checking when the income arose and the applicable reporting requirements.

Information Required in Part B of Form 173A

Part B requires details of the Government securities and the exempt income claimed. The form allows the security details to be repeated where required, making it important to prepare accurate information for each relevant security.

• International Securities Identification Number: The form asks for the International Securities Identification Number, commonly known as the ISIN. This is used to identify a particular security. Investors should check the ISIN against their custodian or investment records. A mistake in the identifier can make it difficult to reconcile the security with the reported transactions and income.

• Type and Tenor of Government Security: The claimant must identify the type of Government security and provide its tenor. The form lists Treasury Bills, fixed-rate bonds, floating-rate bonds and State Development Loans, with an option to specify another type. The security type and tenor should be taken from reliable instrument records and checked against the security identified by the ISIN.

• Opening Value of Securities: Form 173A asks for the total value of the securities as on 1 April of the relevant tax year. The amount should be reconciled with the claimant’s opening investment records. If securities were acquired during the tax year, the investor should ensure that the opening position and subsequent purchases are reported consistently.

• Purchases During the Year: The form asks for the value of securities purchased during the year. Investors should reconcile this information with purchase records and custodian statements, particularly where there have been several transactions in the same security.

Sale Consideration During the Year

The form also asks for the sale consideration of securities sold during the year. The reported figure should be supported by transaction records and checked separately from the capital gains figure. Where transactions involve an exchange or another form of transfer, the claimant should review the applicable reporting treatment and retain records explaining the amounts reported.

Closing Value of Securities

The form requires the total value of the securities as on 31 March of the relevant tax year. This figure should be reconciled with the year-end investment position and the opening balance, purchases and disposals. The form asks for values but does not, in the notification text, set out a detailed valuation method for every circumstance. Claimants should review any applicable instructions or guidance when determining the amounts to report.

Gross Interest and Capital Gains

The claimant must report the gross interest received or accrued during the tax year and the capital gains earned during that year. These figures should be supported by income statements and tax computations. The form’s notes state that amounts are to be filled in Indian rupees unless otherwise provided. Investors dealing in foreign currencies should maintain a clear record of the basis used for conversion and check applicable guidance.

Declaration and Verification

Form 173A includes a declaration that the information furnished is true to the best of the declarant’s knowledge and belief and is in accordance with the relevant Schedule IV provisions. The form provides for the date, place, signature and name of the principal officer. Before signing, the organisation should review both the claimant’s eligibility and the figures included in the form. The declaration makes internal verification especially important where information has been prepared using data from several custodians or service providers.

Form 173A Filing Procedure and Due Date

The Seventh Amendment notification introduces Rule 281A and Form 173A, but its text does not specify a filing deadline, filing frequency or detailed electronic submission procedure for the form. Accordingly, claimants should not assume a particular due date or portal process based only on the notification. They should check for any subsequent rules, official instructions or portal guidance applicable when they prepare and furnish the information.

They should also consider how the form relates to their income-tax return and other applicable obligations. Form 173A is an information requirement for the specified exemption; it should not automatically be treated as a replacement for any return or other filing that is separately required.

Records Investors Should Maintain

The notification prescribes the information in Form 173A, but investors can make the process easier by maintaining records that support their eligibility and calculations. These may include registration records, PAN details, security-wise holding statements, purchase and sale records, interest statements, capital gains calculations and year-end reconciliations.

Where more than one custodian or investment account is involved, a consolidated working paper can help explain how the figures in the form were prepared. These are practical recordkeeping measures. They should not be confused with a list of documents that the notification expressly requires every claimant to upload with the form.

Practical Example of Form 173A Reporting

Suppose an eligible Foreign Institutional Investor holds an Indian Government bond during the 2026–27 tax year. It begins the year with an investment in the bond, purchases additional units during the year and sells part of its holding before 31 March 2027. The investor receives interest from the bond and calculates a capital gain on the sale. If it claims the exemption under the relevant Schedule IV entry, it must consider the Form 173A reporting requirement.

In Part A, the investor would provide its identification, registration and contact details. In Part B, it would report the bond’s ISIN, type and tenor, the opening and closing values, purchases, sale consideration, gross interest and capital gains for the tax year. Before making the claim, the investor should confirm that it qualifies as an eligible FII and that the bond and income satisfy the applicable legal requirements.

Common Errors to Avoid

• Assuming Every Foreign Investor Qualifies: One potential mistake is assuming that all foreign investors are entitled to the exemption. The relevant entries identify particular eligible persons, so the claimant’s legal status must be assessed before the benefit is claimed.

• Reporting Sale Proceeds as Capital Gains: Another error is entering the full sale consideration as the capital gain. The form asks for both figures, which serve different purposes. A separate tax calculation is needed to determine the gain under the applicable law.

• Using Inconsistent Security Records: Differences between the ISIN, security type, opening holdings, transaction records and closing holdings can lead to reporting errors. A security-wise reconciliation can help identify omissions or duplicate entries before the form is signed.

• Assuming Form 173A Guarantees Exemption: Furnishing Form 173A is connected with the information condition for the specified exemption. It does not, on its own, prove that the claimant or every item of income meets the statutory conditions. Likewise, the notification should not be read as automatically providing a waiver of tax deduction at source. Any withholding obligation must be examined under the applicable provisions and procedures.

• Assuming a Deadline or Filing Method: The notification does not state a specific due date or detailed filing method for Form 173A. Claimants should monitor official guidance and avoid relying on an assumed deadline or an unverified submission process.

Benefits of Accurate Form 173A Compliance

Accurate reporting can help eligible claimants organise the information needed to support their exemption claims. It also creates an opportunity to reconcile Government security holdings, interest and capital gains before the figures are used in tax filings.

A consistent record of the claimant’s eligibility, transactions and calculations can make it easier to respond to questions from tax advisers or authorities. For organisations with large portfolios, a structured review process can also reduce the risk of missing a security or reporting inconsistent amounts.

Conclusion

The Income-tax (Seventh Amendment) Rules, 2026 introduce Form No. 173A as the prescribed information form for specified exemption claims relating to Government securities. The requirement is relevant to eligible Foreign Institutional Investors and the Bank for International Settlements when claiming exemption under the applicable Schedule IV entries.

Claimants should first confirm their eligibility and identify the securities and income covered by the exemption. They should then reconcile the information required in Parts A and B, maintain records supporting their calculations and review the principal officer’s declaration. Since the notification does not itself specify a due date or detailed submission procedure, investors should also check for subsequent official instructions. Careful preparation can help support an accurate claim and reduce uncertainty when the information is furnished.

Frequently Asked Questions (FAQ’s)

Q1. What is Form No. 173A?

Ans. Form No. 173A is an information form introduced under the Income-tax Rules, 2026 for claiming the specified exemption on interest and capital gains from Government securities under Schedule IV of the Income-tax Act, 2025.

Q2. When were the Seventh Amendment Rules notified?

Ans. The Income-tax (Seventh Amendment) Rules, 2026 were notified on 19 October 2026 and came into force on their publication in the Official Gazette.

Q3. Who is required to consider filing Form 173A?

Ans. An eligible Foreign Institutional Investor or the Bank for International Settlements claiming exemption under serial number 13D or 13E of Schedule IV, respectively, must consider the requirement to furnish Form 173A.

Q4. Does every FPI automatically qualify for the exemption?

Ans. No. The statutory entry refers to a Foreign Institutional Investor as defined for the relevant purpose. A claimant should assess its status under the applicable law rather than assume that every FPI qualifies.

Q5. What income is covered by the relevant exemption?

Ans. The relevant entries cover interest on Government securities and capital gains arising from their sale, exchange or transfer, subject to the statutory conditions and the prescribed information requirement.

Q6. What details are required in Form 173A?

Ans. The form asks for claimant identification, tax and registration details, contact information, the relevant tax year, and security-wise details such as ISIN, holdings, purchases, sale consideration, interest and capital gains.

Q7. Is Form 173A applicable to individual investors?

Ans. The Schedule IV entries relevant to Form 173A identify FIIs and BIS as the eligible persons. Individual investors should not assume they qualify under these entries merely because they hold Government securities.

Q8. What is the due date for furnishing Form 173A?

Ans. The Seventh Amendment notification does not itself specify a due date for Form 173A. Claimants should check for subsequent official rules or instructions applicable to their filing.

Q9. Are the TIN and SEBI registration fields mandatory for BIS?

Ans. The form states that the tax identification number in the country of residence and the SEBI registration number as an FPI or FII are optional for the Bank for International Settlements.

Q10. Does furnishing Form 173A automatically grant the exemption?

Ans. No. Form 173A addresses the prescribed information requirement. The claimant must also satisfy the applicable statutory conditions for the exemption and correctly determine the income for which it is claimed.