CBDT rolls out new tax form for government securities exemption claims

The Central Board of Direct Taxes (CBDT) has introduced Form 173A as the standardized mechanism for eligible foreign investors and the Bank for International Settlements (BIS) to claim tax exemptions on government securities, according to notifications released under the Income-tax Act, 2025.

The new form mandates detailed disclosure of security holdings, interest income generated, and capital gains realised during the relevant assessment period. These disclosures are essential for taxpayers to substantiate their eligibility for exemptions available under the revised tax legislation.

The move aims to streamline the exemption claim process and ensure greater transparency in the taxation of foreign investment in Indian government debt instruments. The BIS, as an international financial institution with significant holdings in Indian securities, is among the key entities affected by the notification.

Foreign investors claiming exemptions must file Form 173A along with supporting documentation detailing their security portfolio composition and income breakdowns. Tax officials expect the standardized form to reduce processing delays and disputes over exemption eligibility claims.