If you are an Indian-origin Canadian resident with income or assets in India, you are subject to tax rules in both countries. The India-Canada Double Taxation Avoidance Agreement (DTAA) is designed to prevent you from being taxed twice on the same income, but only if you know how to use it.

Here is what NRIs in Ontario should understand.

Who qualifies as an NRI for Indian tax purposes?

India’s Income Tax Act defines a Non-Resident Indian (NRI) as someone who has been outside India for 182 days or more in a financial year (April to March). If you live and work in Canada full-time, you are almost certainly an NRI under Indian tax law. But you are still a Canadian tax resident, which means Canada taxes your worldwide income, including what you earn in India.

Income from Indian property

Rental income from property in India is taxable in both countries. India taxes it first (TDS is deducted by the tenant or property manager at 30% for NRIs). You then report the same income on your Canadian return and claim a Foreign Tax Credit for the Indian tax paid. If the Indian TDS exceeds what Canada would charge on that income, you may not owe anything extra in Canada, but you still must report it.

If you sell property in India, the capital gain is taxable in India (20% with indexation for long-term gains, or the applicable slab rate for short-term). You report the gain in Canadian dollars on your Canadian return as well, and again claim the Foreign Tax Credit.

NRO and NRE account interest

Interest earned in an NRO (Non-Resident Ordinary) account is taxable in India. TDS is deducted at 30%. This interest must also be reported on your Canadian return, with a Foreign Tax Credit for the Indian withholding.

NRE (Non-Resident External) account interest is exempt from Indian tax as long as you maintain NRI status. But it is still taxable in Canada because Canada taxes your worldwide income regardless of what India does.

Pension and retirement income

If you receive a pension from India (EPF, PPF maturity, or a private pension), the treaty generally gives the taxing right to your country of residence, which is Canada. India may still withhold tax, but you can claim that as a credit on your Canadian return.

Key treaty provisions to know

  • Article 6: Income from immovable property (real estate) can be taxed in the country where the property is located.
  • Article 11: Interest income can be taxed in both countries, but the source country (India) is limited to 15% withholding under the treaty, lower than the standard 30% TDS for NRIs. You need to submit Form 10F and a Tax Residency Certificate (TRC) from CRA to claim the reduced rate.
  • Article 13: Capital gains on immovable property are taxed in the country where the property sits.
  • Article 23: Canada must give credit for Indian taxes paid, preventing double taxation.

Practical steps

  • Get a Tax Residency Certificate from CRA each year. This is your proof of Canadian residency for treaty purposes.
  • File Form 10F with your Indian bank or tenant to claim reduced TDS rates under the treaty.
  • Keep records of all Indian income in both INR and CAD, with conversion rates documented.
  • File your Indian return by July 31 (or the extended deadline) and your Canadian return by April 30.

Why this matters

Without proper planning, NRIs end up paying more tax than the treaty requires. The combination of high Indian TDS rates and Canadian worldwide taxation means you need both returns coordinated, not filed independently.

L&R Accounting specializes in India-Canada cross-border tax. We can file both your Canadian and Indian returns, apply the treaty correctly, and make sure your Foreign Tax Credits are maximized.

Geetha Srinivasan, CPA (Ontario), CPA (US)
L&R Accounting Services Ltd.