diff --git a/open-banking-accelerator/components/com.wso2.openbanking.accelerator.identity/src/main/java/com/wso2/openbanking/accelerator/identity/claims/OBDefaultOIDCClaimsCallbackHandler.java b/open-banking-accelerator/components/com.wso2.openbanking.accelerator.identity/src/main/java/com/wso2/openbanking/accelerator/identity/claims/OBDefaultOIDCClaimsCallbackHandler.java
index 52c8bdbb..509ac985 100644
--- a/open-banking-accelerator/components/com.wso2.openbanking.accelerator.identity/src/main/java/com/wso2/openbanking/accelerator/identity/claims/OBDefaultOIDCClaimsCallbackHandler.java
+++ b/open-banking-accelerator/components/com.wso2.openbanking.accelerator.identity/src/main/java/com/wso2/openbanking/accelerator/identity/claims/OBDefaultOIDCClaimsCallbackHandler.java
@@ -31,6 +31,7 @@
 import org.apache.commons.logging.Log;
 import org.apache.commons.logging.LogFactory;
 import org.wso2.carbon.identity.oauth2.IdentityOAuth2Exception;
+import org.wso2.carbon.identity.oauth2.authz.OAuthAuthzReqMessageContext;
 import org.wso2.carbon.identity.oauth2.model.HttpRequestHeader;
 import org.wso2.carbon.identity.oauth2.token.OAuthTokenReqMessageContext;
 import org.wso2.carbon.identity.openidconnect.DefaultOIDCClaimsCallbackHandler;
@@ -91,6 +92,64 @@ public JWTClaimsSet handleCustomClaims(JWTClaimsSet.Builder jwtClaimsSetBuilder,
         return super.handleCustomClaims(jwtClaimsSetBuilder, tokenReqMessageContext);
     }
 
+    @Override
+    public JWTClaimsSet handleCustomClaims(JWTClaimsSet.Builder jwtClaimsSet, OAuthAuthzReqMessageContext
+            authzReqMessageContext) throws IdentityOAuth2Exception {
+        try {
+            if (IdentityCommonUtil.getRegulatoryFromSPMetaData(
+                    authzReqMessageContext.getAuthorizationReqDTO().getConsumerKey())) {
+                Map<String, Object> claims = new HashMap<>();
+                JWTClaimsSet claimsSet = getJwtClaimsFromSuperClass(jwtClaimsSet, authzReqMessageContext);
+                if (claimsSet != null) {
+                    for (Map.Entry<String, Object> claimEntry : claimsSet.getClaims().entrySet()) {
+                        claims.put(claimEntry.getKey(), claimEntry.getValue());
+                    }
+                }
+                updateSubClaim(authzReqMessageContext, claims);
+                for (Map.Entry<String, Object> claimEntry : claims.entrySet()) {
+                    jwtClaimsSet.claim(claimEntry.getKey(), claimEntry.getValue());
+                }
+                return jwtClaimsSet.build();
+            }
+        } catch (OpenBankingException e) {
+            throw new IdentityOAuth2Exception(e.getMessage(), e);
+        }
+        return getJwtClaimsFromSuperClass(jwtClaimsSet, authzReqMessageContext);
+    }
+
+    /**
+     * Update the subject claim of the JWT claims set base on below configurations.
+     * 1. open_banking.identity.token.remove_tenant_domain_from_subject
+     * 2. open_banking.identity.token.remove_user_store_domain_from_subject
+     *
+     * @param authzReqMessageContext token request message context
+     * @param claims                 user claims in OIDC dialect as a map
+     */
+    private void updateSubClaim(OAuthAuthzReqMessageContext authzReqMessageContext, Map<String, Object> claims) {
+
+        Object removeTenantDomainConfig =
+                identityConfigurations.get(IdentityCommonConstants.REMOVE_TENANT_DOMAIN_FROM_SUBJECT);
+        boolean removeTenantDomain = removeTenantDomainConfig != null
+                && Boolean.parseBoolean(removeTenantDomainConfig.toString());
+
+        Object removeUserStoreDomainConfig =
+                identityConfigurations.get(IdentityCommonConstants.REMOVE_USER_STORE_DOMAIN_FROM_SUBJECT);
+        boolean removeUserStoreDomain = removeUserStoreDomainConfig != null
+                && Boolean.parseBoolean(removeUserStoreDomainConfig.toString());
+
+        String subClaim = authzReqMessageContext.getAuthorizationReqDTO().getUser()
+                .getUsernameAsSubjectIdentifier(removeUserStoreDomain, removeTenantDomain);
+        claims.put("sub", subClaim);
+    }
+
+    @Generated(message = "Excluding from code coverage since it makes is used to return claims from the super class")
+    public JWTClaimsSet getJwtClaimsFromSuperClass(JWTClaimsSet.Builder jwtClaimsSetBuilder,
+                                                   OAuthAuthzReqMessageContext oAuthAuthzReqMessageContext)
+            throws IdentityOAuth2Exception {
+
+        return super.handleCustomClaims(jwtClaimsSetBuilder, oAuthAuthzReqMessageContext);
+    }
+
     @Generated(message = "Excluding from code coverage since it makes is used to return claims from the super class")
     public JWTClaimsSet getJwtClaimsFromSuperClass(JWTClaimsSet.Builder jwtClaimsSetBuilder,
                                                    OAuthTokenReqMessageContext tokenReqMessageContext)
diff --git a/open-banking-accelerator/components/com.wso2.openbanking.accelerator.identity/src/test/java/com/wso2/openbanking/accelerator/identity/claims/OBDefaultOIDCClaimsCallbackHandlerTest.java b/open-banking-accelerator/components/com.wso2.openbanking.accelerator.identity/src/test/java/com/wso2/openbanking/accelerator/identity/claims/OBDefaultOIDCClaimsCallbackHandlerTest.java
index 8b0e3466..d9396176 100644
--- a/open-banking-accelerator/components/com.wso2.openbanking.accelerator.identity/src/test/java/com/wso2/openbanking/accelerator/identity/claims/OBDefaultOIDCClaimsCallbackHandlerTest.java
+++ b/open-banking-accelerator/components/com.wso2.openbanking.accelerator.identity/src/test/java/com/wso2/openbanking/accelerator/identity/claims/OBDefaultOIDCClaimsCallbackHandlerTest.java
@@ -38,7 +38,9 @@
 import org.wso2.carbon.identity.application.authentication.framework.model.AuthenticatedUser;
 import org.wso2.carbon.identity.application.authentication.framework.util.FrameworkUtils;
 import org.wso2.carbon.identity.oauth2.IdentityOAuth2Exception;
+import org.wso2.carbon.identity.oauth2.authz.OAuthAuthzReqMessageContext;
 import org.wso2.carbon.identity.oauth2.dto.OAuth2AccessTokenReqDTO;
+import org.wso2.carbon.identity.oauth2.dto.OAuth2AuthorizeReqDTO;
 import org.wso2.carbon.identity.oauth2.model.HttpRequestHeader;
 import org.wso2.carbon.identity.oauth2.token.OAuthTokenReqMessageContext;
 
@@ -64,7 +66,7 @@ public class OBDefaultOIDCClaimsCallbackHandlerTest {
     private OBDefaultOIDCClaimsCallbackHandler obDefaultOIDCClaimsCallbackHandler;
 
     @BeforeClass
-    public void beforeClass() {
+    public void beforeClass() throws OpenBankingException {
 
         Map<String, Object> configMap = new HashMap<>();
         configMap.put(IdentityCommonConstants.CONSENT_ID_CLAIM_NAME, "consent_id");
@@ -74,6 +76,7 @@ public void beforeClass() {
 
         mockStatic(FrameworkUtils.class);
         mockStatic(IdentityCommonUtil.class);
+        PowerMockito.when(IdentityCommonUtil.getRegulatoryFromSPMetaData("123")).thenReturn(true);
         when(FrameworkUtils.getMultiAttributeSeparator()).thenReturn(MULTI_ATTRIBUTE_SEPARATOR_DEFAULT);
         obDefaultOIDCClaimsCallbackHandler = Mockito.spy(OBDefaultOIDCClaimsCallbackHandler.class);
     }
@@ -142,5 +145,22 @@ public void testHandleCustomClaims() throws OpenBankingException, IdentityOAuth2
         assertEquals("{x5t#S256=807-E8KgUMV6dRHTQi1_QYo5eyPvjmjbxCtunbFixV0}", jwtClaimsSet.getClaim(
                 "cnf").toString());
         assertEquals("aaa@gold.com", jwtClaimsSet.getClaim("sub"));
+
+        OAuth2AuthorizeReqDTO oAuth2AuthorizeReqDTO = new OAuth2AuthorizeReqDTO();
+        OAuthAuthzReqMessageContext oAuthAuthzReqMessageContext =
+                new OAuthAuthzReqMessageContext(oAuth2AuthorizeReqDTO);
+        oAuthAuthzReqMessageContext.setAuthorizationReqDTO(oAuth2AuthorizeReqDTO);
+
+        oAuth2AuthorizeReqDTO.setUser(authenticatedUser);
+
+        oAuth2AuthorizeReqDTO.setConsumerKey("123");
+        PowerMockito.when(jwtClaimsSetInitial.getClaims()).thenReturn(new SingletonMap("scope", "test"));
+        Mockito.doReturn(jwtClaimsSetInitial).when(obDefaultOIDCClaimsCallbackHandler)
+                .getJwtClaimsFromSuperClass(jwtClaimsSetBuilder, oAuthAuthzReqMessageContext);
+        JWTClaimsSet jwtClaimsSet2 = obDefaultOIDCClaimsCallbackHandler.handleCustomClaims(jwtClaimsSetBuilder,
+                oAuthAuthzReqMessageContext);
+
+        assertEquals("aaa@gold.com@carbon.super", jwtClaimsSet2.getClaim("sub"));
+
     }
 }