Foreign Income from India

[NiSn]

Hi

I moved to Canada in Jan 2020.
From Apr 2020 to Dec 2020 I have following incomes in India -
a) NRO Account - Interest earner (with TDS deducted)
b) Capital gains on stocks liquidated from Apr 2020 to Dec 2020 - No Tax deducted in India
c) Capital gains on stocks liquidated from Jan 2021 onwards - No Tax deducted in India

Now while filing Canadian Return for year Jan 2020 to Dec 2020, how can I avail tax credit on foreign income as I will only pay Indian taxes after Mar 2021 on the capital gains? Will I end up paying full tax in Canada initially and then in India also the same income will be taxed?

 

[NiSn]

Adding more details


Hi I have a related case

I am a Canadian Tax resident for 2020 (Moved to Canada in Jan 2020). I have following incomes for the year

Canada (Jan 2020 - Dec 2020) - Salary in Canada

India (Jan 2020 - Dec 2020) - Interest income from FDs in India in NRO bank account, Capital Gains realised from selling of Equity shares in India (No TDS deducted as this was Resident Demat account)

India (Jan 2021 - Mar 2021) - Interest income from FDs in India in NRO bank account, Capital Gains realised from selling of Equity shares in India (No TDS deducted as this was Resident Demat account)

Now in India, I am yet to pay any taxes on Capital Gains from Sale of Equity shares, while TDS has been deducted @30% on Interest incomes in bank accounts. I wanted to know, since both Interest income & Capital gains in India will be taxable both in India as well as Canada, how should I avail tax exemptions under DTAA?

Shall I first pay Canada taxes in full by reporting global income, and then while filing India Tax return after Mar 2021 say that income is already taxed in Canada so dont tax it in India? Or income tax will have to be paid in India and I have to find a way to get tax credit in canada? How can that be done since I wont know income tax to be paid in India till I file the returns?

 

[steaky]

I suggest you file your first Canadian tax return via an accountant who understands the tax treaty between Canada and India.

 

[Lazymon82]

Adding more details


Hi I have a related case

I am a Canadian Tax resident for 2020 (Moved to Canada in Jan 2020). I have following incomes for the year

Canada (Jan 2020 - Dec 2020) - Salary in Canada

India (Jan 2020 - Dec 2020) - Interest income from FDs in India in NRO bank account, Capital Gains realised from selling of Equity shares in India (No TDS deducted as this was Resident Demat account)

India (Jan 2021 - Mar 2021) - Interest income from FDs in India in NRO bank account, Capital Gains realised from selling of Equity shares in India (No TDS deducted as this was Resident Demat account)

Now in India, I am yet to pay any taxes on Capital Gains from Sale of Equity shares, while TDS has been deducted @30% on Interest incomes in bank accounts. I wanted to know, since both Interest income & Capital gains in India will be taxable both in India as well as Canada, how should I avail tax exemptions under DTAA?

Shall I first pay Canada taxes in full by reporting global income, and then while filing India Tax return after Mar 2021 say that income is already taxed in Canada so dont tax it in India? Or income tax will have to be paid in India and I have to find a way to get tax credit in canada? How can that be done since I wont know income tax to be paid in India till I file the returns?

Hoping you filed taxes for Jan - Mar 2020 in canada for the taxation year 2019-2020. First 6 months you are still indian resident and so you declare any income in india for indian taxation year 2020-2021. Starting 7th month indian income is considered global income and must be declared in candian tax year 2020-2021. If the income generated in the first 6 months is less than indian tax free threshold then a simple declaration of the total amount in indian taxes should do I think.