Indian Company Entering Canada: RBI Reporting, Canadian Registration and Treaty Tax

Indian software, engineering, pharmaceutical and manufacturing companies are among the most active foreign entrants in Toronto, Mississauga, Brampton and Calgary. The route has three stages: report the investment out of India, set up and register in Canada, and manage the tax on profits and payments that move between the two countries. This guide for an Indian company entering Canada walks through each stage using the Canada-India tax agreement and CRA guidance, as of October 2026. Your Chartered Accountant confirms the Indian rules, and a Canadian CPA or lawyer confirms Canadian corporate law.

How can an Indian company entering Canada choose a structure?

The Canada-India agreement, signed in 1996, treats these items among others as a permanent establishment: a branch, office, factory, warehouse (for a person providing storage to others), store or sales outlet, a building site or construction project continuing for more than 120 days in a 12-month period, and services provided through employees for more than 90 days in any 12-month period, or for a related enterprise. It also treats an agent with authority to conclude contracts as creating one, subject to exceptions. For a project business this matters more than the entity form.

How to enter Canada, step by step

1. Plan the Indian reporting. The RBI's Master Direction on Overseas Investment (updated as on April 1, 2026) says a person making a financial commitment fills Form FC and approaches the designated authorised dealer bank. Your Chartered Accountant confirms limits and continuing reporting under the Overseas Investment Rules, 2022.
2. Check the Investment Canada Act. Establishing a new Canadian business, or acquiring control of one, is subject to notification, given before implementation or within 30 days after. Review thresholds are published by Innovation, Science and Economic Development Canada.
3. Incorporate or register. Federal incorporation under the Canada Business Corporations Act requires at least 25% resident Canadian directors, and at least one if there are fewer than four directors; provincial rules vary. See incorporating federally or provincially.
4. Get the CRA business number. The CRA has separate registration paths for residents and for non-residents, including businesses incorporated or located outside Canada; the Non-Resident Tax Centre handles registrations through a web form or Form RC1.
5. Register for GST/HST if you are carrying on business in Canada and are not a small supplier. The threshold is $30,000 of worldwide taxable revenue in a single quarter and over four quarters. See GST/HST registration and filing.
6. Set up payroll and provincial registrations for staff and sales taxes.
7. File the T2 each year. The return is due six months after year-end, and a non-resident corporation that carried on business in Canada files even when a treaty exempts the income, with Schedule 91 for the exemption claim.
8. Bring the intercompany agreements into line for loans, services and licences, using arm's-length pricing.

What does the Canada-India agreement say about money sent to India?

Part XIII tax is remitted by the 15th of the following month and NR4 slips are due by March 31 the next year. The recipient gives Form NR301 to show residence and beneficial ownership. Fees for services performed in Canada by a non-resident are subject to 15% Regulation 105 withholding, with Form T4A-NR due by the end of February. The agreement defines "fees for included services" as technical or consultancy services that make technical knowledge available or are ancillary to a royalty. Details are in our Canada-India treaty guide and the Part XIII guide.

What happens on the Indian side?

The dividend, interest and fees you receive from Canada are income of the Indian company, taxed under the Income-tax Act that applies to the year (the 2025 Act applies from tax year 2026-27, and the 1961 Act applies to earlier years). Canadian tax paid can usually be claimed as a foreign tax credit with the right documents; ask your Chartered Accountant about Form 67 and treaty documents such as the tax residency certificate and Form 10F. Transfer pricing documentation may be needed for charges between the Indian parent and the Canadian subsidiary; see India transfer pricing basics.

Documents and information you need

• Board approval and the Indian company's audited financial statements
• Form FC documents and the authorised dealer bank's requirements
• Canadian directors' identification and a registered office address
• Intercompany agreements, staff lists and expected travel days in Canada
• Tax residency certificate for the Indian company, and Form NR301 for payments from Canada
• Details of any US owners or US subsidiaries, who may have US reporting

A worked example

Deccan Digital Pvt Ltd of Pune forms a Mississauga subsidiary with C$400,000 of equity, reported on Form FC through its bank. The subsidiary earns C$300,000 after tax in year two and pays a C$200,000 dividend to the parent. The statutory Part XIII rate is 25%, or C$50,000. With the agreement's 15% rate for a parent controlling at least 10% of the voting power, Part XIII tax is C$30,000, remitted by the 15th of the next month, with an NR4 slip by March 31. Before the subsidiary existed, six engineers spent 100 days in Ontario serving a client; because that is above the agreement's 90-day services test, the Canadian CPA reviewed the permanent establishment risk. Figures are hypothetical.

If you have US owners or a US subsidiary

A US person who owns or controls the Indian company, or a US subsidiary that owns the Canadian company, may have US reporting such as Forms 5471 and 8858 and FBAR. We handle the US side and coordinate with your Chartered Accountant and Canadian CPA so the three filings agree. See US business reporting for foreign companies.

Mistakes to avoid

• Sending funds to Canada before the Indian bank and reporting steps are in place.
• Assuming a short assignment cannot create a permanent establishment.
• Withholding too little on service fees paid for work done in Canada.
• Claiming the 15% dividend rate without evidence of the 10% voting power.
• Treating the Canadian company's staff as Indian payroll without checking visa and payroll rules; see hiring foreign workers in Canada.

How we can help

We handle the U.S. side of cross-border structures and coordinate with your Indian Chartered Accountant and Canadian CPA so Form FC, the T2, the Indian return and any US filings match. We do not prepare Canadian or Indian returns and are not licensed in either country. Our firm is based in the Aurora, Illinois area and works with families and companies that span India, Canada and the USA. See cross-border tax, business formation and registrations and foreign account and asset reporting.

Frequently asked questions

General information only. It is not tax, legal, accounting or immigration advice for your situation, and rules change; confirm the current rules with the official source or a licensed professional in the relevant country.