The Investment Is in India, but the Tax Story Continues in Canada
Moving to Canada does not mean you have to stop investing in India. It does mean that the same Indian bank account, mutual fund, shareholding or property can start living inside two rulebooks at once.
India still decides whether you are allowed to hold or buy the asset as an NRI, which account can fund it, and whether the money can later be repatriated. Canada separately asks when you became a Canadian tax resident, what worldwide income you earned after that date, what your Canadian cost base is, and whether Form T1135 applies.
That is where otherwise sensible investors get tripped up. Someone may correctly convert a resident bank account to NRO, keep an NRE fixed deposit and continue an old Indian portfolio—yet still miss the Canadian side because the money never entered Canada.
The better approach is to build the structure first: establish the date Canadian tax residency begins, preserve arrival-date values, clean up the Indian NRI account setup, decide whether future investments should be repatriable, then layer Canadian tax and reporting over the portfolio.
⚡ Quick answer
Can an NRI Living in Canada Invest in India?
Yes. An NRI or OCI living in Canada can generally use permitted Indian routes for eligible shares, mutual funds, ETFs, deposits, bonds, NPS and other investments, subject to FEMA, RBI, SEBI, product and intermediary rules. But Canadian tax residency changes the reporting layer: Canada generally taxes residents on worldwide income, and foreign assets can trigger Form T1135 when the total cost amount of specified foreign property exceeds CAD 100,000 at any time in the year. A newcomer generally does not file T1135 for the first year they become resident, and property already owned at that point generally receives a Canadian cost amount based on fair market value at arrival for future T1135 purposes.
Key takeaways
Canadian immigration status and Canadian tax residency are related but not identical; tax residency turns on the actual residence rules and ties.
Once you are resident in Canada for tax purposes, Canada generally taxes your worldwide income for the resident part of the year.
Many assets you already owned before moving to Canada are generally treated as reacquired at fair market value when Canadian residency begins, creating an important Canadian cost-base reset.
A newcomer generally does not file Form T1135 for the first tax year in which they become a Canadian resident.
For later years, T1135 generally applies if the total cost amount of specified foreign property exceeds CAD 100,000 at any point in the year.
The CAD 100,000 T1135 threshold is generally based on cost amount, not current market value.
T1135 is a reporting form, not a tax calculation. Foreign income remains reportable even if the asset value is below the threshold.
NRE interest can be exempt in India when the applicable conditions are met, but Canada can still tax the interest because Canadian residents report worldwide income.
Canadian-resident NRIs can invest in India, but a product being legal under Indian rules does not guarantee that every AMC, broker or platform will accept a Canadian resident.
Some Indian mutual-fund scheme documents explicitly restrict Canadian residents, so AMC-level acceptance must be checked before sending money.
Indian tax withheld or paid can sometimes support a Canadian foreign tax credit, subject to Canadian rules and the India–Canada tax treaty.
Repatriation should be planned before investing. NRE/repatriable and NRO/non-repatriable routes can lead to different banking documentation later.
1. The First Date to Record Is When Canadian Tax Residency Starts
For most newcomers, the important date is not the day a visa was stamped or permanent residence was approved.
It is the date Canadian tax residency actually begins.
The CRA says an individual usually becomes resident when sufficient residential ties are established. A home in Canada, a spouse or common-law partner, and dependants are among the strongest ties. For many newcomers, this is the day they start living in Canada, but residency is still a facts-and-circumstances question.
Why does this date matter so much?
Because for the part of the year you are resident, Canada generally requires you to report world income—income from both inside and outside Canada.
Income earned before Canadian residency begins is not simply folded into the post-arrival Canadian tax calculation. That creates a natural line in the sand.
If you arrive with Indian shares, deposits, mutual funds or property, keep a permanent record of:
- your Canadian residency start date;
- the fair market value of each major asset on that date;
- the INR/CAD exchange rate used;
- bank and investment statements around the arrival date; and
- any accrued income that belongs to the pre-arrival period.
This arrival file can be more valuable later than a glossy portfolio statement.
2. Canada Often Gives Pre-Existing Assets a New Cost Starting Point
A person who owned an Indian investment before moving to Canada may not use the original Indian purchase cost as the Canadian tax cost forever.
Under Canada’s immigration rules, many properties are deemed disposed of immediately before residency begins and reacquired at fair market value. For future Canadian capital-gain calculations, that often means the Canadian cost starts from the value at arrival rather than the historic India cost.
That is a major planning difference from the U.S. system and one of the strongest reasons to document arrival-day values properly.
Suppose you bought Indian shares for ₹5 lakh years ago and they are worth ₹14 lakh when you become a Canadian resident.
India can still care about the original acquisition history when you sell.
Canada may start its future gain calculation from the fair market value when Canadian residency begins.
Two countries can therefore calculate different gains from the same sale without either calculation being wrong.
Investor note
Take the Arrival-Day Valuation Seriously
Do not wait until the investment is sold three years later to estimate what it was worth when you moved to Canada. Save broker statements, fund NAVs, bank balances and a defensible exchange-rate record when residency begins.
3. Fix the Indian Banking Structure Before Adding New Investments
Once you become non-resident under the applicable Indian foreign-exchange rules, the Indian banking setup should reflect that status.
A resident savings account should not simply continue indefinitely because it is convenient.
For most investors, the practical foundation is some combination of:
- NRE for eligible foreign earnings and repatriable money;
- NRO for Indian-source receipts and other permitted rupee funds; and
- FCNR(B) when a qualifying foreign-currency deposit is useful.
RegalTicker’s NRE vs NRO vs PIS guide explains the distinction in depth.
The key point for a Canada-based investor is this:
NRE and NRO are money routes. They do not determine the Canadian tax result.
An NRE account may preserve repatriability and can receive favorable Indian tax treatment on eligible interest. Canada can still tax the interest if you are a Canadian resident.
An NRO account may be the right Indian account for rent, dividends or other rupee receipts. Canada can still require the income to be reported.
The country-of-residence tax layer sits on top of the Indian account structure.
4. What Can a Canada-Based NRI Invest in?
Indian rules permit NRIs and OCIs to access a broad range of investments, but the operational route differs by product.
For a full product map, use RegalTicker’s NRI Investment Options in India.
Indian listed shares
RBI’s current foreign-investment framework permits NRI/OCI investment in listed Indian equity through the applicable repatriable and non-repatriable routes, subject to account, ownership and investment conditions.
A Canada-based investor still needs the correct NRI bank, Demat and trading structure supported by the broker.
Mutual funds
Indian rules generally permit NRI investment in domestic mutual funds.
But Canada introduces an extra operational layer: not every AMC or every scheme necessarily accepts Canadian residents.
Current Indian scheme documents show that some funds explicitly exclude residents of Canada, while other fund houses may support them under different procedures.
So do not read “NRIs can invest in Indian mutual funds” as “every Indian mutual fund accepts Canadian residents.”
The correct sequence is:
- confirm NRI eligibility under Indian law;
- confirm the AMC currently accepts Canadian residents;
- confirm the platform accepts Canadian residents;
- complete NRI KYC/FATCA/CRS requirements; and
- understand Canadian tax and T1135 treatment before investing.
RegalTicker’s NRI Mutual Fund Investing in India explains the Indian account and KYC side. Canada-specific mutual-fund tax deserves its own separate guide rather than being squeezed into this pillar.
Deposits, bonds and other investments
NRE, NRO and FCNR(B) deposits remain common NRI banking products. Eligible government securities, bonds, ETFs, REITs/InvITs and NPS can also be available under the applicable rules.
The useful test is not “Can an NRI invest?”
It is:
Can I invest from Canada through this specific institution, and what will Canada call the income or asset afterward?
5. Canada Taxes the Income Even When the Money Stays in India
A Canadian resident does not avoid Canadian tax simply because income remains in an Indian account.
Foreign interest and dividends generally have to be reported in Canadian dollars. The CRA generally uses the Bank of Canada exchange rate in effect when the amount arises, although acceptable alternatives can apply if used consistently and properly documented.
This creates a common surprise with NRE deposits.
NRE interest can be exempt from Indian income tax when the relevant conditions are met.
That does not make it automatically tax-free in Canada.
If you are a Canadian resident and the interest is taxable under Canadian rules, Canada can tax it even if:
- the account is in India;
- the money is not remitted to Canada;
- India charged no tax; and
- the deposit is labelled “tax-free” in Indian banking material.
This is why “tax-free” should always be followed by the question:
Tax-free in which country?
6. T1135: The Reporting Rule Every Canada-Based NRI Should Know
Form T1135 is Canada’s Foreign Income Verification Statement.
It is one of the most important differences between the Canada and U.S. NRI clusters because it can apply to a broad mix of Indian financial and investment assets.
The general trigger is when the total cost amount of specified foreign property exceeds CAD 100,000 at any time during the year.
This is an aggregate test.
A taxpayer could hold:
- CAD 45,000 of Indian shares;
- CAD 35,000 in an Indian bank account; and
- CAD 30,000 in an Indian mutual fund.
None exceeds CAD 100,000 on its own.
Together they can cross the threshold.
What can count as specified foreign property?
Depending on the facts, specified foreign property can include foreign funds, shares of non-resident corporations, interests in non-resident mutual funds, foreign rental property held for profit and other foreign financial property.
CRA also says a foreign-issued life-insurance policy can be specified foreign property.
Personal-use property is treated differently and can fall outside T1135 where the statutory conditions are met.
The first-year newcomer exception
A particularly useful newcomer rule is often missed.
An individual does not have to file T1135 for the tax year in which they first become resident in Canada.
For later years, CRA says the cost amount of foreign property already owned when the person became resident is generally its fair market value at that time.
That makes the arrival-day valuation relevant twice:
- Canadian future capital-gain basis; and
- future T1135 cost testing.
7. T1135 Is Not a Tax Threshold
The CAD 100,000 number causes confusion because people treat it as though income below it is tax-free.
It is not.
CRA explicitly separates the two questions.
You can have foreign property below the T1135 filing threshold and still owe Canadian tax on the income.
For example, a Canadian resident has an Indian bank deposit with a cost amount of CAD 40,000 and receives interest.
The investor may be below the T1135 threshold if there is no other specified foreign property.
The interest can still be reportable in Canada.
Think of T1135 as an information-reporting layer, not as a tax exemption.
8. Indian Shares: Canada and India Can See the Same Sale Differently
Indian shares are a good example of why records have to be kept in both systems.
India can tax a non-resident’s capital gain under Indian law, subject to the applicable asset rules, rates, withholding and treaty position.
Canada separately calculates the gain in Canadian dollars using Canadian cost and tax rules.
If the shares were already owned when you became Canadian resident, the Canadian starting cost can be the arrival-date fair market value rather than the historic Indian cost.
Currency movements add another difference.
A share can rise in rupee terms but produce a smaller Canadian-dollar gain—or the reverse.
That is why the Indian broker capital-gain statement should be treated as source evidence, not copied directly into the Canadian return.
Keep:
- original Indian acquisition records;
- arrival-date value;
- CAD conversion working;
- later purchase lots;
- sale contract notes;
- Indian tax/TDS evidence; and
- Canadian adjusted-cost-base records.
9. Foreign Tax Credit: Where Double Tax Is Reconciled
India and Canada both taxing the same economic income does not necessarily mean you simply pay both taxes in full.
Canada’s federal foreign tax credit can generally be available where a Canadian resident paid qualifying foreign income or profit tax on foreign income that was also reported in Canada.
The amount of credit is subject to Canadian rules, limitations and the nature of the income.
The India–Canada tax treaty can also affect the result.
The practical mistake is assuming that every Indian deduction or withholding equals a Canadian credit.
Keep separate evidence for:
- gross Indian income;
- Indian tax withheld;
- final Indian tax liability;
- refund, if any;
- Canadian-dollar conversion; and
- the same income reported in Canada.
For example, Indian TDS can be larger than the final Indian tax after a return is filed. The Canadian foreign-tax-credit analysis should be based on the qualifying foreign tax position, not simply on the first number deducted by the Indian payer.
10. Repatriation Is a Banking Route, Not a Canadian Tax Event by Itself
Eventually, many investors ask:
“How do I move the money back to Canada?”
That question should have been considered before the original investment.
NRE balances and eligible proceeds can follow repatriable routes under the applicable Indian framework.
NRO current income and eligible capital or asset-sale proceeds follow a different remittance framework. RegalTicker’s NRI Repatriation from India guide explains the NRE/NRO/FCNR and USD 1 million routes in detail.
From the Canadian side, the bank transfer itself is not automatically the event that creates income.
The taxable event may have happened earlier:
- interest was credited;
- a dividend was paid;
- units were redeemed;
- shares were sold; or
- property generated rent.
Moving already-owned money from India to Canada later does not erase or recreate that underlying income event.
This is why source-of-funds records matter.
11. A Better Setup for Someone Moving From India to Canada
Consider a practical example.
Rohan moves from Bengaluru to Toronto in September.
He already owns:
- an Indian equity portfolio;
- one mutual fund;
- an NRE fixed deposit opened during an earlier overseas posting;
- an Indian savings account;
- and a small amount of rental income from a flat.
A weak approach is to do nothing until the first Canadian tax return.
A better sequence is:
Before or around the move
- establish the likely Canadian residency-start date;
- download statements for every Indian account and investment;
- record fair market values at the residency date;
- preserve INR/CAD exchange-rate evidence;
- update Indian residential/KYC status;
- redesignate the resident savings account where required;
- identify which investments are repatriable and which are not.
During the first Canadian tax year
- report worldwide income for the resident portion of the year;
- keep India tax/TDS records;
- remember that the first-year T1135 newcomer exception can apply;
- do not assume that an India tax exemption means a Canadian tax exemption.
Before the second Canadian tax year begins
- calculate the Canadian cost amount of specified foreign property;
- determine whether the aggregate can exceed CAD 100,000;
- build the T1135 record before year-end rather than reconstructing it at filing time.
This kind of housekeeping is not exciting, but it prevents expensive cross-border cleanup later.
12. What Not to Do
Do not leave resident Indian accounts untouched indefinitely
Your Indian banking and investment records should reflect your actual status under the applicable rules.
Do not use T1135 as a tax test
Being below CAD 100,000 does not make Indian income tax-free in Canada.
Do not assume NRE interest stays tax-free after moving to Canada
Indian exemption and Canadian tax treatment are separate.
Do not assume every Indian mutual fund accepts Canadian residents
Check the actual AMC and current scheme documents.
Do not use the original rupee cost as the Canadian basis without checking the newcomer rules
Arrival-date fair market value can matter.
Do not wait until you need money in Canada to ask whether the investment was repatriable
The funding route and records established at purchase can matter years later.
Do not discard old cost records after the Canadian arrival-value reset
India can still need the historic acquisition cost even when Canada starts from a different basis.
13. Canada–India Investment Record Checklist
Keep one permanent cross-border investment folder.
| Record | Why it matters |
|---|---|
| Canadian residency start date | Defines the Canadian tax period |
| Arrival-date asset values | Future Canadian basis and T1135 cost |
| INR/CAD rate evidence | Canadian reporting |
| NRE/NRO/FCNR statements | Account source and repatriation |
| Demat and broker statements | Share history |
| Mutual-fund folio statements | Cost, income and redemption |
| India TDS/tax records | Foreign tax credit |
| Bank interest certificates | Canadian foreign-interest reporting |
| Property records | Rent, sale and T1135 analysis |
| Remittance paperwork | Source-of-funds trail |
| Prior Canadian returns/T1135 | Year-to-year consistency |
Long-lived cross-border records deserve the same discipline as corporate-action records. RegalTicker’s Demerger Cost Basis Calculator is a useful reminder that a future tax calculation often depends on information created years earlier.
Frequently asked questions
Can an NRI living in Canada invest in Indian stocks?
Yes, subject to the applicable Indian NRI banking, Demat, trading, FEMA and foreign-investment rules. The Canadian investor must also report resulting income and gains under Canadian rules.
Can Canadian residents invest in Indian mutual funds?
Indian rules generally permit NRI mutual-fund investment, but some individual schemes or fund houses restrict Canadian residents. Check the current AMC and platform policy before investing.
Is NRE interest tax-free in Canada?
An NRE interest exemption under Indian law does not automatically apply in Canada. Canadian residents generally report worldwide income, including foreign interest.
What is the T1135 threshold?
Form T1135 generally applies when the total cost amount of specified foreign property exceeds CAD 100,000 at any time during the year. It is an aggregate cost test, not a per-account threshold.
Does a newcomer file T1135 in the first year in Canada?
An individual generally does not have to file T1135 for the tax year in which they first become resident in Canada. The rule should still be checked against the person’s actual residence facts.
What cost do I use for Indian assets after moving to Canada?
For many assets owned when Canadian residency begins, Canadian rules generally deem the property reacquired at fair market value around that time. CRA also uses that fair market value as the cost amount for future T1135 testing for new residents.
Does T1135 mean I owe extra tax?
T1135 is an information-reporting form. Tax on foreign income is calculated under the normal Canadian tax rules. You can owe Canadian tax even when T1135 is not required.
Does Indian rental property go on T1135?
Foreign real property held to earn rental income can be specified foreign property. Property used primarily for personal use can fall under a different rule. The facts matter.
Can Indian tax be claimed in Canada?
Qualifying Indian income or profit tax paid on income also reported in Canada may support a Canadian foreign tax credit, subject to Canadian limitations and treaty rules.
Is sending money from India to Canada taxable?
The transfer itself is not automatically the tax event. The underlying interest, dividend, sale, rent or other income can have been taxable earlier. Keep a source-of-funds trail.
Verify through official sources
Official references
- Canada Revenue Agency — Determining an Individual’s Residence Status — Canadian tax-residency and worldwide-income framework.
- Canada Revenue Agency — Completing Your Return for Newcomers — World-income reporting for the resident portion of a newcomer year.
- Canada Revenue Agency — Form T1135 Questions and Answers — CAD 100,000 threshold, first-year newcomer exception, cost amount and specified foreign property.
- Canada Revenue Agency — Foreign Income Verification Statement — T1135 reporting framework.
- Canada Revenue Agency — Federal Foreign Tax Credit — Canadian foreign-tax-credit rules for qualifying foreign tax.
- Canada Revenue Agency — Interest and Other Investment Income — Foreign interest/dividend reporting and Canadian-dollar conversion.
- Reserve Bank of India — Master Direction: Foreign Investment in India — Current NRI/OCI equity investment framework and repatriable/non-repatriable routes.
- Reserve Bank of India — FEMA Non-Debt Instruments Rules Framework — NRI/OCI investment payment and remittance rules, including mutual-fund routes.
- Reserve Bank of India — NRE/NRO Accounts FAQ — NRE/NRO repatriability and account treatment.
- Income Tax Department, India — Non-Resident FAQs — Current NRI tax and NRE-interest residency linkage under the Income Tax Act, 2025.
- Income Tax Department, India — India–Canada Tax Treaty Synthesised Text — Current treaty text as modified by the MLI.
- SEBI — NRI Investor Education Material — NRI investment routes and host-country compliance considerations.
- SEBI — Current Mutual Fund Scheme Documents — Current scheme documentation demonstrating that Canadian-resident eligibility can differ by AMC and scheme.
Final takeaway
Build the Canada Structure Before Building the India Portfolio
For a Canada-based NRI, investing in India is not difficult because there are too few products. It is difficult because the investment has to remain coherent across two systems.
Start with the Canadian residency date. Record arrival-day values. Fix the Indian NRI banking structure. Decide whether the money should remain repatriable. Check whether the actual broker, AMC or bank accepts Canadian residents. Then report the resulting income and assets correctly in Canada.
The sequence is simple enough to remember:
Residency date → arrival values → NRE/NRO structure → product access → Canadian income tax → T1135 → foreign tax credit → repatriation.
Once that foundation is in place, the specialist Canada guides can go deeper into T1135, mutual funds, Indian deposits, property and repatriation without repeating the same country setup every time.
Educational disclaimer: This guide is for investor education and general cross-border tax awareness. It is not individual Canadian or Indian tax, legal, immigration, banking or investment advice. Canadian residence, T1135 classification, Indian NRI status, product eligibility, foreign tax credits and repatriation depend on the investor’s facts and the rules applicable in the relevant year.