Earning a profit in another country is only half the job; the other half is getting it home without losing more to tax and paperwork than necessary. A company with subsidiaries or branches in India, Canada and the United States faces three sets of withholding rules, three treaties and three sets of forms. This guide to repatriating profits and dividends between India, Canada and the US sets out the rates and the paperwork in each direction, the deadlines, and how the home country gives relief. It uses October 2026 sources, and your advisor in each country confirms the local rules.
Repatriating profits and dividends between India, Canada and the US: what are the rates?
| Paid from | Paid to | Domestic rate | Treaty rate, parent with at least 10% | Treaty rate, other holders |
|---|---|---|---|---|
| United States | Canada | 30% | 5% | 15% |
| United States | India | 30% | 15% | 25% |
| Canada | United States | 25% (Part XIII) | 5% | 15% |
| Canada | India | 25% (Part XIII) | 15% | 25% |
| India | United States | 20% plus surcharge and cess | 15% | 25% |
| India | Canada | 20% plus surcharge and cess | 15% | 25% |
The ownership test is stated slightly differently in each treaty: the US-Canada and US-India treaties refer to the voting stock of the paying company, and the Canada-India agreement to the voting power. The rates come from the IRS treaty table (revised May 2023), the treaty texts and the Income Tax Department's TDS chart as amended by the Finance Act, 2026. Where a treaty has a limitation on benefits article, an entity must also pass one of its tests; see Table 4 on the IRS treaty page.
How do other payments move?
- Interest: US to Canada 0% on ordinary interest; US to India 15%; Canada to India 15% under the agreement.
- Royalties and fees: US to Canada 0% for patents, know-how and copyrights and 10% for film and equipment rentals; US to India 15% and 10% for equipment; Canada to India 15% and 10% for equipment-type royalties.
- Service fees: Canada withholds 15% on fees for services performed in Canada by non-residents (Regulation 105) before any treaty claim.
- Branch profits: the US-Canada treaty caps branch tax at 5% and allows a cumulative C$500,000 threshold; the Canada-India agreement allows an additional tax of up to 15%; India lets a branch office remit profit net of Indian taxes on production of audited accounts and a Chartered Accountant certificate. The US tax on a foreign branch follows our Indian company and Canadian company guides.
- Capital repatriation: the RBI defines investment on a repatriation basis as investment whose sale or maturity proceeds, net of taxes, can be repatriated. Share buybacks and capital reductions have separate corporate-law and tax rules.
How to repatriate a dividend, step by step
- Confirm the company can pay. Check distributable profits under the paying country's company law and any loan covenants.
- Prove treaty status. Collect Form W-8BEN-E for US payments, Form NR301 for Canadian payments, and a tax residency certificate and Form 10F for Indian payments (TRC and Form 10F).
- Withhold at the right rate. Without valid paperwork the domestic rate applies.
- Remit the tax. Canada: by the 15th of the month after payment. US: on the deposit schedule in the Form 1042 instructions. India: through TDS deposit rules; your Chartered Accountant handles them.
- File the information return. US: Forms 1042 and 1042-S by March 15 of the next year. Canada: NR4 slips and summary by March 31 of the next year. India: the TDS statements and certificates.
- Complete the bank paperwork. Indian remittances abroad go through an authorised dealer bank, usually with Forms 15CA and 15CB (guide).
- Report at home and claim relief. Record the gross dividend, the foreign tax and the credit or deduction.
What relief does the receiving country give?
| Receiving country | Typical relief | Notes |
|---|---|---|
| United States | Foreign tax credit; for a corporation, a deduction under section 245A for the foreign-source portion of qualifying dividends from a specified 10%-owned foreign corporation | Form 1120 Schedule C; conditions such as a holding period apply |
| Canada | Credit for foreign tax; deduction for dividends out of exempt surplus of a foreign affiliate | The Canada-India agreement refers expressly to exempt surplus; your CPA tracks the surplus pools |
| India | Credit for foreign taxes under the treaty and Indian law, claimed with the documents | See Form 67 |
Our foreign tax credits across three countries guide shows how to avoid losing credit by claiming on the wrong income category.
Deadlines and penalties at a glance
| Country | Return or remittance | Due | Penalty or risk |
|---|---|---|---|
| United States | Forms 1042 and 1042-S | March 15 of the next year | Withholding agent is liable for tax, interest and penalties |
| Canada | Part XIII remittance | 15th of the following month | 3% to 10% late remittance; 10% for failure to withhold, 20% for repeat knowing failures |
| Canada | NR4 | March 31 of the next year | Information return penalties |
| India | TDS deposit and statements | Per Indian TDS schedule | Interest and penalties; confirm with your CA |
A worked example
Fox Valley Foods Inc., a US parent in Aurora, owns 100% of a Pune company and 100% of an Ontario company. In 2026 each pays a US$100,000 dividend. Ontario withholds 5% under the US-Canada treaty, or US$5,000, with Form NR301 on file. Pune withholds at the 15% treaty rate with a tax residency certificate and Form 10F, or US$15,000; without them the domestic 20% plus surcharge and cess would apply. In the other direction, a US subsidiary of a Pune parent pays the same US$100,000 dividend and withholds 15%, or US$15,000, if it holds Form W-8BEN-E; without it, US$30,000. The US parent includes the foreign dividends on its Form 1120 and reviews the section 245A deduction and credit options. Figures are hypothetical.
Mistakes to avoid
- Paying the dividend first and collecting the treaty documents afterwards.
- Applying a 10% ownership rate to a holder whose share class or holding period does not qualify.
- Forgetting that fees for services performed in Canada carry 15% withholding even when no dividend is involved.
- Assuming the treaty rate is automatic for an entity subject to limitation on benefits.
- Claiming credit in the wrong year or category.
How we can help
We prepare the US forms for cross-border dividends, interest and royalties, model the net cash for each payment route, and coordinate with your Canadian CPA and Indian Chartered Accountant so the withholding, credit and reporting match in all three countries. We handle the US side only and do not prepare Canadian or Indian returns. Our firm is based in the Aurora, Illinois area. See cross-border tax, business tax returns and planning and foreign account and asset reporting.
Frequently asked questions
What is the cheapest way to send profits from India to the US?
It depends on the structure. Dividends from an Indian company to a US company with at least 10% of the voting stock are capped at 15%, while interest, royalties and fees may be taxed at other treaty rates and are deductible to the payer. We model the options.
Do I need Form 10F for the India treaty rate?
A tax residency certificate and Form 10F are the usual documents to support a treaty claim in India; your Chartered Accountant confirms what applies to your payee.
Does Canada withhold on dividends to the US?
Yes. The default Part XIII rate is 25%, reduced to 5% for a US company holding at least 10% of the voting stock and 15% otherwise.
Can the US parent deduct a dividend from a foreign subsidiary?
A corporation may be able to claim the section 245A deduction for the foreign-source portion of qualifying dividends from a specified 10%-owned foreign corporation, subject to conditions. Confirm before relying on it.
Are branch profits taxed like dividends?
Not exactly. Branch profits tax and remittance rules differ by country, and the treaty may cap the additional tax.
Official sources
- IRS: Tax Treaty Table 1 (Rev. May 2023)
- Convention between the United States and India
- Agreement between Canada and India (1996)
- Department of Finance Canada: Canada-US tax convention (consolidated)
- Income Tax Department of India: TDS rates (as amended by Finance Act, 2026)
- CRA: NR4 - Non-Resident Tax Withholding, Remitting, and Reporting
This page summarizes public guidance in plain language. If anything here differs from the official source, the official source controls.
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.