General information, not tax advice. Confirm your position with a Canadian tax professional.
Selling from Canada? This article covers the Canadian side only. For the full process (PoA, TDS, Form 128, registration, repatriation), start with our hub: How to sell property in India from Canada.
Do I pay Canadian tax when I sell property in India?
Yes, if you're resident in Canada for tax purposes. Canada taxes residents on worldwide income, so a gain on a flat in Mumbai is treated like a gain on a condo in Toronto.
India taxes it too: under the India–Canada DTAA, India can tax gains on property located in India, and Canada gives credit for the Indian tax. You pay India first; Canada tops up only if its tax on the gain is higher. Our DTAA guide and DTAA calculator explain the mechanics.
What cost does CRA use? The deemed acquisition rule on immigration
When you became a Canadian resident, property you already owned is deemed to have been acquired at its fair market value (FMV) on that date (s.128.1 of the Income Tax Act). Canada only taxes growth that happened while you were resident.
So if you bought a flat in 2008 for ₹30 lakh, it was worth ₹65 lakh when you landed in 2015, and you sell it for ₹1 crore, Canada looks at the growth from ₹65 lakh, not from ₹30 lakh. India still taxes the gain from your original ₹30 lakh cost; the deemed cost is a Canadian rule only.
If you bought the property after becoming resident, there's no deemed cost; CRA uses your actual purchase cost.
›How to get a landing-date valuation
Few people have one from the day they landed, so build one now:
- Confirm your date. Your Confirmation of Permanent Residence or other immigration record shows when you became resident.
- Engage a registered valuer in India for a retrospective valuation report as of that date.
- Back it with evidence: comparable sales in the building or locality around that date, the circle (ready reckoner) rate then in force, and the property's condition and specifications.
- Convert to CAD at the Bank of Canada rate on your landing date, and file the report with your immigration document.
A reasoned report with comparables carries far more weight with CRA than a broker's estimate.
How much of the gain is taxed? The 50% inclusion rate
Only 50% of your capital gain is added to your income (the "taxable capital gain"). It's then taxed at your combined federal and provincial marginal rate.
You may remember the 2024 proposal to raise the inclusion rate to two-thirds for gains above CAD 250,000. That proposal was cancelled in March 2025. The inclusion rate remains 50%.
How do I convert rupees to Canadian dollars?
Every amount must be in CAD. Use Bank of Canada exchange rates: the rate on the date of each transaction, or an annual average where CRA permits it.
Convert the cost (or deemed cost) at its own date and the proceeds at the sale date; don't convert a rupee gain once. Because the rupee has generally weakened against the Canadian dollar over time, the CAD gain is often noticeably smaller than the INR gain suggests, and can even be a loss.
Illustrative worked example
Illustrative only. Assumptions: ₹52 = CAD 1 on the purchase date (2018); ₹60 = CAD 1 on the sale date and when Indian tax is paid (2026); combined federal + provincial marginal rate of 45%; Indian total income below ₹50 lakh (no surcharge on the actual tax); no selling costs or exemptions.
Rahul has lived in Canada since 2015. In 2018 he bought a flat in Pune for ₹60 lakh with money sent from Canada. He sells it in October 2026 for ₹90 lakh.
India: gain ₹30,00,000. Tax at 12.5% = ₹3,75,000, plus 4% cess of ₹15,000 = ₹3,90,000.
The buyer, however, deducts TDS on the full price: 14.3% (12.5% + 10% surcharge + 4% cess) × ₹90 lakh = ₹12,87,000, unless Rahul gets a Form 128 (earlier Form 13) certificate. Without it, ₹8,97,000 waits for an Indian refund. Try the Form 128 estimator.
Canada:
| Amount | |
|---|---|
| Proceeds (₹90,00,000 ÷ 60) | CAD 150,000 |
| Cost (₹60,00,000 ÷ 52) | CAD 115,385 |
| Capital gain | CAD 34,615 |
| Taxable capital gain (50%) | CAD 17,308 |
| Canadian tax at 45% | CAD 7,789 |
| Less foreign tax credit (₹3,90,000 ÷ 60) | CAD 6,500 |
| Net Canadian tax | CAD 1,289 |
the currency effect: ₹30 lakh of INR gain is CAD 50,000 at today's rate, but the CAD gain is only CAD 34,615 because the rupee weakened between 2018 and 2026.
If you bought before immigrating, the deemed cost usually shrinks the Canadian gain further, often until the Indian credit wipes out Canadian tax. The Canada hub walks through that scenario.
How do I claim credit for Indian tax? Forms T2209 and T2036
- Form T2209 calculates the federal foreign tax credit.
- Form T2036 calculates the provincial credit for Indian tax not used federally (Quebec residents claim on their Quebec return).
Three rules trip people up:
- Claim the final Indian tax, not the TDS. If the buyer over-deducted and you'll get a refund in India, only your actual Indian liability is creditable.
- The credit is capped at the Canadian tax on that gain. If Indian tax is higher, Canada doesn't refund the excess.
- Indian exemptions reduce the credit. If you use Section 54 or 54EC to cut Indian tax, there's less Indian tax to credit, and the Canadian tax may rise. Section numbers are the familiar ones from the 1961 Act; the 2025 Act renumbers them but the relief is the same. See our capital gains playbook.
The gain itself goes on Schedule 3. Keep the buyer's TDS certificate and your Indian return as proof of tax paid.
Do I need to file T1135 for property in India?
Form T1135 (Foreign Income Verification) is required if the total cost of your specified foreign property exceeded CAD 100,000 at any time in the year. Penalties apply for late filing.
| Asset | Counts for T1135? |
|---|---|
| Flat rented out in India | Yes |
| Land or plot held for investment | Yes |
| NRO account balance (including sale proceeds) | Yes |
| Home used personally by you or your family | No |
The trap: a personal-use flat never triggers T1135, but ₹90 lakh of sale proceeds in your NRO account can push you over CAD 100,000.
Principal residence: a foreign home can technically be designated as your principal residence on Form T2091. It's rarely beneficial because the designation uses up years you might need for your Canadian home, so ask your adviser.
What if I inherited the property?
For Canadian purposes, you acquire inherited property at its FMV on the date of death, converted at that day's rate. If you inherited before you immigrated, the deemed acquisition at your landing date applies instead, since that's the later date.
In India, your cost is generally the previous owner's cost, so the Indian gain is often much larger than the Canadian one. Our inherited property LTCG calculator helps with the India side.
When do I report it? Canada's calendar year vs India's April–March
| Sale date | Indian tax year | Canadian return |
|---|---|---|
| October 2026 | 2026-27 (April 2026 – March 2027) | 2026, due 30 April 2027 |
| February 2027 | 2026-27 (April 2026 – March 2027) | 2027, due 30 April 2028 |
An October 2026 sale goes on your 2026 Canadian return, but the Indian return isn't filed until after March 2027. Work out your final Indian liability before claiming the T2209 credit. If the Indian figure changes after you file, request an adjustment to your Canadian return.
Get the India side right first
NRiSimplify handles the India side of the sale fully remotely, with one person in charge, and gives you the figures your Canadian tax preparer needs. See our NRI property sale service, read the Canada hub, or book a free call (+91-97119-88391).
Related guides
Keep reading: Capital gains playbook.
Do I pay Canadian tax on property sold in India if I'm a Canadian resident?
Yes. Canada taxes residents on worldwide income, so the gain goes on Schedule 3. Only 50% of the gain is taxable, at your marginal rate. India taxes the gain first, and you claim a foreign tax credit for Indian tax on Forms T2209 and T2036. Canada then collects only the difference, if its tax on the gain is higher.
What is the deemed acquisition cost on immigration to Canada?
When you became a Canadian resident, property you already owned is treated as acquired at its fair market value on that date, under s.128.1 of the Income Tax Act. Only growth after you landed is taxable in Canada. Get a retrospective valuation from a registered valuer in India as of your landing date and keep it on file.
Is the capital gains inclusion rate in Canada 50% or two-thirds?
It is 50%. The government proposed raising it to two-thirds for gains above CAD 250,000, but that proposal was cancelled in March 2025. So half of your capital gain from selling property in India is added to your income and taxed at your combined federal and provincial marginal rate.
Can I claim the TDS deducted in India as a foreign tax credit?
Only to the extent it's your actual final Indian tax. TDS is often deducted on the full sale price, so part of it may be refunded after you file your Indian return. CRA credits the Indian tax you finally owe, not the amount withheld. The credit is claimed on Form T2209, with T2036 for the provincial portion.
Does property in India need to be reported on T1135?
Yes, if it's specified foreign property, such as a rental flat or land held for investment, and your total specified foreign property cost exceeds CAD 100,000 at any time in the year. A home used personally by your family is excluded. Your NRO account balance counts, including sale proceeds sitting in it after the sale.
Which exchange rate should I use to convert the sale to CAD?
Use Bank of Canada rates: the rate on the date of each transaction, or an annual average where permitted. Convert your cost or deemed cost at its own date and the sale proceeds at the sale date. Don't calculate the gain in rupees and convert once, because exchange-rate movement changes the CAD gain.