Tax guide for newcomers from India: income, property and treaty basics

What does Canada tax once you arrive from India?

Most newcomers become residents of Canada on the day they arrive and set up a home. From that day, the CRA says you report your world income. That includes income from India.

• Before your residency date: Indian salary and interest are not taxed in Canada. You still enter them as world income for benefits.
• From your residency date: report interest, rent, dividends, pensions and gains from India.
• Convert each amount to Canadian dollars at the Bank of Canada rate for the day you received it.

Money you bring with you is not income. Only what it earns after you arrive is. Moving money is covered in bringing money from India.

What does the Canada–India treaty say?

The agreement was signed on January 11, 1996, entered into force on May 6, 1997, and applies in Canada from January 1, 1998.

When both countries may tax, Article 23 says Canada deducts Indian tax from Canadian tax on that income. In practice that is the foreign tax credit. Compare with other treaties in five tax treaties compared.

Interest on NRE, NRO and fixed deposit accounts

Interest earned in Indian accounts after you become a resident of Canada is taxable in Canada. That applies even if India does not tax it, and even if you leave the money in India.

• Report it on your Canadian return in Canadian dollars.
• If India withheld tax, you may claim a foreign tax credit, up to the Canadian tax on that interest.
• The treaty limits Indian tax on interest to 15% of the gross. The CRA says tax withheld above the treaty rate does not count for the credit; ask India about a refund of any excess.

How Indian rules treat NRE and NRO accounts after you move is explained in NRE and NRO accounts for Canadian residents.

Indian pensions, EPF and PPF

Article 18 of the treaty says pensions arising in India are taxable only in India. The CRA says you still report treaty-exempt pension income, then deduct it on line 25600.

Provident fund and savings scheme payments are harder. The treaty does not define “pension”. An EPF, PPF or NPS payment could be treated as a pension, a lump sum or investment income. This page does not classify them. Ask the CRA or a cross-border tax professional before you file. See foreign pensions and Canadian tax.

Example: Rohan’s first two Canadian returns

Rohan became a resident of Canada on August 1, 2026, when he moved to Ottawa. He kept a fixed deposit in India and a flat in Pune, which he rents out.

• Fixed deposit interest after August 1, 2026: $1,500. India withheld $150 (10%, under the 15% cap). He reports $1,500 and claims a foreign tax credit for $150, up to the Canadian tax on it.
• Rent after August 1, 2026: $4,000 gross, $1,000 of expenses, so $3,000 net on Form T776. He paid $300 of Indian tax on the rent. He claims a credit for it.
• Flat: its fair market value on August 1, 2026 becomes its cost for Canadian tax.
• Form T1135: not needed for 2026, his arrival year. For 2027, the rented flat and the deposit both count. If their total cost (the flat’s cost is its value on arrival) is over $100,000 at any time in 2027, he files it with his 2027 return.

All amounts are in Canadian dollars at the Bank of Canada rate for each day. Check the form rules with the T1135 checker.

Property you own in India

Canada treats you as if you sold most property you own and bought it back at its fair market value on the day you became a resident. That value is your cost for Canadian tax. Any gain before you arrived is not taxed in Canada.

• Rent from Indian property is taxable in Canada and may be taxed in India.
• If you sell, both countries may tax the gain under Article 13. Canada gives a credit for Indian tax.
• Keep proof of the value on your arrival date, such as a valuation report.

Details and a sale example are in selling or renting out property in your home country.

Do you still have to deal with Indian tax?

Possibly. India decides who is its resident under its own law, and the treaty lets India tax some Indian income of residents of Canada. The treaty text refers to Indian tax years that begin on April 1, so your last Indian year may overlap with your first Canadian one. If both countries treat you as resident, the treaty tie-breaker applies. See dual residency and the tie-breaker.

This page does not explain Indian tax rules. Check the Income Tax Department of India. If you send money out of India, see India’s tax collected at source (TCS).

Common mistakes for newcomers from India

• Leaving Indian interest off. Interest after your residency date is taxable in Canada, wherever you keep it.
• Using the purchase price as your cost. For property you owned before arriving, the cost is its value on your residency date.
• Claiming a credit on an exempt pension. If you deducted it on line 25600, leave it out of the foreign tax credit.
• Missing Form T1135. It starts the year after you arrive if the cost of your foreign property passes $100,000.

Common questions

Sources

• Canada–India tax agreement, signed January 11, 1996 (Global Affairs Canada treaty text)
• Global Affairs Canada: Canada–India tax agreement record (entry into force May 6, 1997)
• CRA: Completing your return for newcomers
• CRA: Newcomers to Canada and the CRA
• CRA: Line 11500, Other pensions and superannuation (pensions from a foreign country)
• CRA: Line 25600, Additional deductions (exempt foreign income)
• CRA: Line 40500, Federal foreign tax credit
• CRA: Income Tax Folio S5-F2-C1, Foreign tax credit (¶1.35, tax withheld above the treaty rate)
• CRA: Questions and answers about Form T1135
• Justice Laws: Income Tax Act, section 128.1 (becoming resident: deemed disposition and acquisition)
• Bank of Canada: Exchange rates
• Income Tax Department of India: e-filing portal

Checked against these sources on October 10, 2026. Spotted something out of date? Tell us.