Do I pay tax in India if I sell Indian shares from Canada?
Residence decides which system taxes the gain first and which one gives credit for the other. A sale of Indian shares is Indian-source, so India looks at it whatever your residence; the country you live in then taxes you on your worldwide income and relieves the double charge by credit. The order matters more than most people expect, because India usually takes its tax at source, before any exemption or treaty position has been considered. You do not get to choose that sequence. What you can influence is how much is held back at the point of sale, and how quickly any excess comes back to you. Both of those are settled before the trade, not after it.
Will my Indian broker deduct tax before the money reaches me?
Usually, yes. India collects on most non-resident receipts at source, and the deduction is applied to what the transaction pays out rather than to the gain the transaction actually made. Where the shares were bought long ago and the cost is low against the price, those two amounts sit close together and the deduction is roughly right. Where the cost is high, the deduction can exceed the tax by a wide margin, and the difference is your cash sitting with the Indian revenue until a return is filed and processed. There is nothing irregular about this and it is not a penalty. It is simply collection running ahead of computation.
Can I claim the Indian tax I paid on my Canadian return?
In the ordinary case yes, but the relief is limited and the timing rarely lines up. Your country of residence gives credit for foreign tax properly payable on foreign-source income, not for everything that was withheld. If India held back more than the transaction owed, the excess is not foreign tax you have paid; it is a refund you have not yet collected, and claiming it as credit overstates the claim. That is why the Indian return and the residence-country return are worked as one file here rather than two. The Indian year and the residence-country year also close at different points, so a deduction and the refund that corrects it can fall in different filing periods.
What is a lower deduction certificate and do I need one?
It is an Indian authorisation, obtained before the transaction settles, telling the party paying you to deduct at a lower rate than the default. It is the only practical way to stop an over-deduction happening at all. Granted before closing, it releases the cash at the table. Applied for afterwards it does nothing, because the money has already gone and the only route left is a return and a refund claim. Clients tend to discover the certificate exists about a week after completion, which is the worst possible moment to learn about it. Where a sale is planned, the application is the first piece of work and everything else waits behind it.
Do I have to file an Indian return if tax was deducted?
Filing and paying are separate obligations. Tax taken at source is a payment on account. It is not an assessment and it does not settle what you owe, in either direction. The Indian return is where the gain is computed properly, the deduction is credited against it, and any excess becomes a refund claim. If you never file, that excess simply stays where it is. The return is also where a treaty position is asserted, because deduction at source is applied before any exemption has been considered. So for most non-residents the Indian filing is a reconciliation and refund exercise rather than a payment exercise, and skipping it costs money rather than saving it.
Do I report Indian shares to the CRA if I keep them?
Reporting and taxing are different questions with different triggers. Canadian residents have a foreign property disclosure, T1135, which is about telling the CRA what is held outside Canada. It is not a tax charge, and holding reportable property does not mean anything is owing. Shares in an Indian company are the kind of asset that has to be considered for it. The point to take from this is that a year in which you sell nothing and receive nothing can still be a year with a filing obligation, and the exposure for missing a disclosure form is not measured by the tax on the asset, because there may be none.
What is Schedule FA and who has to complete it?
It is the foreign asset disclosure in an Indian return, and the trigger is residential status rather than income: a resident discloses foreign bank accounts, custodial and equity holdings, foreign life insurance with a cash value, immovable property and other assets held at any time in the year, plus any beneficial interest. A non-resident does not. The obligation is disclosure-based, so it applies to an account that earned nothing, and the penalties under the black-money legislation are what make it worth getting right. See Schedule FA reporting.
Do foreign shares, ESOPs and RSUs count as foreign assets in an Indian return?
Yes. Equity held directly, shares acquired under an employee plan once they have vested to you, units in foreign funds, the custodial account they sit in and the foreign bank account that funds it are all disclosable by a resident — separately, with acquisition cost, peak value and income for the year. This is where returning employees of multinational groups most often have a gap, because the plan administrator reports to the employer, not to you. See Schedule FA reporting.
