Miss Form 173A? Your Govt Bond Tax Exemption Gone

CBDT's 2026 tax amendment now requires investors — including co-op bank members, HUFs, NRIs, and trusts holding government securities — to file Form 173A to claim zero-tax status on interest income. Skip it and TDS gets deducted automatically.

Here's what happened: CBDT's Income-tax (Seventh Amendment) Rules, 2026 introduced Form 173A as a mandatory self-declaration for investors seeking tax exemption on government securities interest income.. Without this form, the paying entity — your bank, RBI Retail Direct, or bond custodian — is legally required to deduct TDS automatically before crediting interest to your account.. Eligible filers include co-operative bank members, HUFs, NRIs, charitable trusts, and other specified entities that hold central or state government securities and qualify for zero-tax treatment..

What you should do: Check your next government bond or G-Sec interest credit date — log into RBI Retail Direct or your demat account and file Form 173A with the paying entity BEFORE that date.. Download Form 173A from the Income Tax India portal (incometax.gov.in) and submit a separate declaration to each institution holding your government securities — one form per paying entity.. If TDS has already been deducted, file your ITR and claim the refund under Schedule TDS — attach Form 173A proof to support your exemption claim and speed up processing..

File Form 173A at least 15 days before your bond's interest credit date — paying entities need processing time and are not obligated to reverse TDS once deducted.

For readers weighing their credit and loan options, our personal loan guide and CIBIL score resources put this update in context.