File your Indian return first
TaxBuddy can help prepare your India ITR with TDS reconciliation, so you have the figures needed for your Canadian foreign tax credit (Form T2209).
Start with TaxBuddyNRIWallah team
Updated October 2026
Two tax systems
Canada and India both tax on residence, and both want to know about your worldwide income. An Indian in Canada has to report correctly in each country. The India-Canada double taxation agreement prevents you paying full tax twice on the same income, but you claim the relief yourself, on your Canadian return.
Your position as a Canada-based NRI
Canada taxes worldwide income
A Canadian tax resident reports all income from all sources: the Canadian salary, Indian rent, Indian FD interest, dividends and capital gains, interest from NRE and NRO accounts, and gains on Indian property. Indian tax paid is then claimed as a credit.
India taxes Indian-source income
An NRI is taxed in India only on income earned or accruing there. TDS rates below are before surcharge and cess (as of FY 2025-26):
| Income | Taxable in India? | TDS rate |
|---|---|---|
| Salary for services performed in India | Yes | Slab rates |
| Rent | Yes | 30% |
| NRO FD interest | Yes | 30% |
| NRE FD interest | No | Nil |
| Property capital gains | Yes | 12.5% long-term, slab rate short-term |
| Listed equity capital gains | Yes | 12.5% long-term, 20% short-term |
| Dividends | Yes | 20% |
How the treaty relief works
- India deducts TDS first. For example, 30% on NRO interest.
- You report the same income in Canada, converted to Canadian dollars at the rate on the date received.
- You claim a foreign tax credit on Form T2209 for the Indian tax paid. The credit reduces Canadian tax dollar for dollar, up to the Canadian tax on that income.
In effect you pay the higher of the two countries’ rates rather than both. If you earn Rs 5,00,000 of rent and India deducts Rs 1,50,000, and your Canadian marginal rate is 40%, you report the rent in Canada and claim the Indian tax. You pay Canada about the 10% difference, not 40% on top of the Indian tax.
Canadian registered accounts
- RRSP. Contributions are deductible up to 18% of the previous year’s earned income, to a 2025 maximum of CAD 32,490. Growth is tax-deferred until withdrawal. Claim any employer match first.
- TFSA. The 2025 limit is CAD 7,000, and gains and withdrawals are tax-free. It is Canada’s counterpart to the UK ISA.
- RESP. The government adds 20% of contributions up to CAD 500 a year per child through the CESG.
- FHSA. Up to CAD 8,000 a year for first-time buyers, combining an RRSP-style deduction with tax-free growth.
Foreign property reporting: Form T1135
If the total cost of your specified foreign property is above CAD 100,000 at any time in the year, you must file Form T1135 with your return. That includes:
- Indian bank accounts, including NRE, NRO and FCNR deposits.
- Indian mutual funds and shares.
- Indian real estate held for investment or rent.
Property held inside Canadian registered accounts does not count, and nor does property you use personally. Whether an Indian home you visit counts is a grey area, so take advice.
The late-filing penalty is CAD 25 a day, to a maximum of CAD 2,500, and CRA can reassess unreported foreign income for six years instead of three. Inherited property and old bank accounts can take you over CAD 100,000 without your noticing, so check each year.
Indian investments and Canadian tax
- PPF and NPS. India treats both as tax-free, but Canada does not recognise them as registered plans, so interest and growth may be taxable in Canada annually.
- Indian mutual funds. Some Indian fund houses do not accept investments from Canadian residents, so check first. Gains are taxable in Canada when realised, and a fund treated as a non-resident trust may be taxed annually.
- NRE FDs. The interest is tax-free in India but taxable in Canada.
- NRO FDs. The interest is taxable in India (30% TDS) and in Canada, with a foreign tax credit.
Filing checklist
Canadian return (due 30 April): report worldwide income, claim the Indian tax on Form T2209, file Form T1135 if required, and report registered account contributions.
Indian return (due 31 July for most individuals): report Indian-source income only, claim deductions that apply, match TDS to Form 26AS and claim any refund.
Convert accounts to NRO or NRE once you become non-resident, as FEMA requires. The Canada hub covers banking and settling in, the DTAA estimator shows how the credit works on a sample of income, and the rent TDS calculator covers the 31.2% withheld from rent paid to an NRI.
NRIWallah does not provide tax advice. This guide is general information, so consult a qualified cross-border tax adviser about your situation. Rules and treaty provisions change, so check the current position with the CRA and the Indian Income Tax Department.
