- NRE interest is exempt in India but taxable in Canada.
- File T1135 if Indian investments cost more than CAD 100,000 at any time in the year.
- Use a CRA residency certificate + Form 41 for the 15% treaty rate on interest; claim the foreign tax credit in Canada.
Income by income: India vs Canada
| Income or asset | India | Canada (residents) | Watch out |
|---|---|---|---|
| NRO interest | Taxed; bank deducts TDS (30% plus surcharge and cess by default) | Taxable; claim the foreign tax credit | Treaty caps Indian tax at 15% with a Canadian residency certificate and Form 41 |
| NRE / FCNR interest | Exempt while you are an NRI | Taxable for Canadian residents | Often missed on Canadian returns |
| Dividends from Indian shares | Taxed in India; treaty cap 15% (company with 10%+ voting power) or 25% | Taxable; credit for Indian tax | Claim the treaty rate |
| Sale of Indian property | Capital gains tax; buyer deducts TDS | Taxable as a capital gain; credit for Indian tax | Lower-TDS certificate (Form 128) avoids over-deduction |
| Indian bank accounts, shares, funds, property held for investment | — | Report on Form T1135 if total cost exceeds CAD 100,000 at any time in the year | Penalties for late or missing T1135 |
| Rent from Indian property | Taxed; tenant may deduct TDS | Taxable; credit for Indian tax | File an Indian return to claim deductions |
Form T1135: reporting Indian assets
Canadian residents must file Form T1135 (Foreign Income Verification Statement) if the total cost of their specified foreign property — Indian bank deposits, shares, mutual funds and property held for investment — exceeds CAD 100,000 at any time in the year. A home you use personally is generally not included. Late or missing filings attract penalties, so keep a running cost record of Indian assets.
Avoiding double tax
- In India: claim the India–Canada treaty rate (for example 15% on interest) with a certificate of residency from the Canada Revenue Agency and Form 41.
- In Canada: claim the foreign tax credit for Indian tax paid on the same income.
- File an Indian return to recover excess TDS — see NRI income tax return.
Moving to or from Canada
Your Indian residential status depends on days spent in India — see residential status and RNOR. Planning a move back? Read returning to India — most of the RNOR planning applies to Canada too.
How we help
We handle the Indian side — returns, TDS refunds, lower-TDS certificates, property sales and repatriation up to USD 1 million a year — and coordinate with your Canadian accountant. See NRI tax services and India advisory for clients in Canada.
Sources
Frequently asked questions
Is NRE interest taxable in Canada?
Do I need to file T1135 for my Indian bank accounts?
What is the treaty rate on Indian interest for Canadian residents?
Please note: this guide is general information based on the rules as they stood on the review date above. Regulations and RBI/CBDT procedures change often — please get advice on your specific facts before acting.