The India Canada tax treaty is the Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion between the Governments of Canada and India, signed in Delhi on January 11, 1996. It replaced a 1985 agreement and applies to income tax in both countries. It matters if you moved from India to Canada, moved back, are an Indian citizen studying or working in Canada, earn interest, dividends or rent in India while living in Toronto or Calgary, or run a business that sells across both borders. The treaty does not remove tax. It decides which country taxes first, caps source-country withholding and requires relief in the other country. Pair it with the Canada-India checklists for moves.
Who can use the India Canada tax treaty?
A person who is a "resident" of Canada, India or both. Each country decides first under its own law. Canada looks at residential ties; see Canadian tax residency rules. India's Income Tax Department says the basic test of an individual's residence did not change under the Income-tax Act, 2025: 182 days or more in the tax year, or 60 days plus 365 days in the preceding four years, with special rules for Indian citizens and people of Indian origin visiting India, a deemed-resident rule for citizens with income above ₹15 lakh who are not taxable elsewhere, and unchanged "not ordinarily resident" criteria. For years that began before April 1, 2026, the 1961 Act still decides. See the India residency guide and the transition guide.
How does the tie-breaker work for a dual resident?
Article 4 mirrors the U.S.-Canada order of tests. You are resident where you have a permanent home available. If you have one in both, the closer personal and economic relations decide. If that cannot be fixed, habitual abode decides, then nationality, and finally the competent authorities agree. A company resident in both is not treated as resident of either for treaty benefits unless the authorities agree. Document each step with leases, family location, employment and bank evidence; see the three-country residency tie-breaker if the United States is also involved.
What does the treaty say about common income?
| Income | Article | Rule in the text | Practical point |
|---|---|---|---|
| Dividends | 10 | Source country may tax at no more than 15% if the owner is a company controlling at least 10% of the voting power, otherwise 25% | A Canadian individual holding Indian shares is in the 25% category |
| Interest | 11 | Source country tax capped at 15%; exemptions for government payers, central banks and certain export-agency loans | Applies to Indian bank interest paid to a Canadian resident |
| Royalties and fees for included services | 12 | 15% in later years (20% or 15% in the first five years of effect); 10% for ancillary services tied to equipment rentals | "Fees for included services" requires technical knowledge to be made available |
| Capital gains | 13 | Gains may be taxed in both countries | Each applies domestic law; relief comes through Article 23 |
| Employment | 15 | Taxed in the work country unless present no more than 183 days in the fiscal year, the employer is not resident there and no permanent establishment bears the pay | No separate dollar threshold, unlike the U.S.-Canada text |
| Self-employed professionals | 14 | Taxed in the residence country unless a fixed base, 183 days, or more than C$2,500 from local payers | Check the three alternative triggers |
| Pensions | 18 | Taxable only in the country where they arise | Indian pensions stay taxable in India for a Canadian resident |
| Students | 20 | Payments from outside the host country for maintenance, education or training are not taxed there | Supports tuition and living funds sent from India |
| Other income | 21 | Taxable only in the residence country, with exceptions | Trust and estate income capped at 15% at source |
How do you claim treaty benefits step by step?
- Test residency in Canada and India for each year, using day counts.
- Apply the tie-breaker if both claim you and keep the evidence.
- Identify the article that applies to each income type and check the rate cap.
- Get the residency proof. Canada issues a certificate of residency; India asks for a tax residency certificate from the other country and a prescribed self-declaration (Form 10F under the earlier rules; your CA confirms the current form). See India tax treaties, Form 10F and TRC.
- Give the payer the declaration. Canadian payers withhold a default 25% under Part XIII, and the CRA tells payers to check the treaty rate; non-residents of Canada use the CRA's declaration form (NR301). Indian payers apply TDS and the treaty rate only with the paperwork.
- Claim relief. Under Article 23, Canada deducts Indian tax from Canadian tax on Indian-source income; India credits Canadian tax against Indian tax on the same income, up to its proportionate limit. Canadian filers use Form T2209; Indian filers claim foreign tax credit on Form 67 under the earlier rules, so confirm the current form with your CA.
- File on time in both countries and keep proof.
Documents to gather
- Passports, PR card or study permit, OCI card if applicable
- A dated day-count calendar for both countries
- Indian tax residency certificate request details and Canadian certificate of residency
- Interest, dividend, rent and pension statements with TDS certificates and the Annual Information Statement from the Indian portal
- Canadian T1 slips and Notice of Assessment
- Property deeds or leases in each country
Deadlines and penalties
The treaty changes no due dates. A Canadian resident files the T1 by April 30 (June 15 for the self-employed), and a Canadian who holds foreign property costing more than C$100,000 files Form T1135 by the same date; see the T1135 guide. Indian filing dates follow Indian law and your CA. A person who believes they were taxed contrary to the agreement may present a case to the competent authority of their country of residence within two years of the first notification (Article 25). Penalties come from each country's domestic law, not the treaty.
Worked example
Anita moved from Pune to Mississauga in 2024 and became a Canadian resident. In the 2025 tax year she earned ₹5,00,000 of interest on an Indian NRO account. India withholds under Indian law, capped at 15% for a Canadian resident who supplies the residency certificate and declaration. In Canada she reports the interest in Canadian dollars and claims a foreign tax credit for the Indian tax, limited to the treaty-capped amount. Tax withheld above the cap is not creditable in Canada, so she asks the bank to apply the treaty rate. The figures are hypothetical, and rates and forms should be confirmed with your Canadian and Indian advisers.
Mistakes to avoid
- Assuming Canada will credit all Indian tax withheld when the treaty rate was lower.
- Ignoring the "make available" test for fees for services.
- Missing MLI changes: Finance Canada lists the India agreement among those covered by the Multilateral Instrument, so check whether a provision you rely on is modified.
- Failing to file in India because "tax was already deducted".
- Using the Article 15 183-day rule without the other two conditions.
- Applying the U.S.-Canada pension rule to India.
How we can help
We are a U.S. CPA firm in the Aurora, Illinois area. If you are also a U.S. citizen, green card holder or resident, we handle the U.S. side, including FBAR, Form 8938 and foreign tax credits on Indian and Canadian income, and we coordinate with your Canadian CPA and Indian Chartered Accountant so the three filings agree. We do not prepare Canadian or Indian returns. See cross-border tax services, foreign account and asset reporting and the cross-border hub. Also useful: the Canadian tax rules for non-residents.
Frequently asked questions
Is the India Canada tax treaty the same as DTAA?
Yes. DTAA stands for double taxation avoidance agreement, which is the Indian term for the treaty.
Does the treaty exempt my Indian salary in Canada?
No. A Canadian resident is taxable in Canada on world income, and the treaty provides credit for Indian tax on Indian-source income.
Are Indian pensions taxed in Canada?
Article 18 says pensions are taxable only in the country where they arise, so an Indian pension is normally taxed in India. Check whether a government pension falls under Article 19 instead.
Does the treaty apply to students?
Article 20 exempts maintenance and education payments from abroad. See the students guide.
Where can I read the text?
The Government of Canada publishes the agreement on its treaty database, and Finance Canada lists it as in force.
Official sources
- Government of Canada: Canada-India Income Tax Agreement (treaty text)
- Finance Canada: Canada's tax treaties in force
- CRA: Rates for Part XIII tax
- CRA: Tax treaties
- Income Tax Department: Non-resident FAQs under the Income-tax Act, 2025
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.