Why is tax being deducted on my NRO interest?
Because India collects at source before it works out what you actually owe. Deduction on a non-resident’s Indian income happens as the money is credited, ahead of any exemption, deduction or treaty relief you may be entitled to. That is why the Indian return for most non-residents is a reconciliation and a recovery rather than a payment: the tax has already gone, and the filing is how you show that too much went and claim the difference back. Not filing does not avoid tax. It leaves the deducted amount with the government permanently.
Can I move money from my NRO account to my NRE account?
Movement between the two is possible but conditional, because the accounts hold different kinds of money for different purposes. The account for Indian-source income carries conditions the account for foreign funds does not, so a transfer between them is in effect a request to change the character of the money. Banks therefore ask for evidence that the tax position on the underlying income has been dealt with, in the form of certification rather than assurance. The sequence matters: settle the tax and the documentation first, then ask for the transfer. Asking first simply produces a list of documents you then have to go and obtain.
Do I still have to file in India if tax was already deducted?
If you want the excess back, yes. Deduction at source is made on a gross figure at a rate fixed for the payment, not on your actual taxable position for the year. Where your income falls below the level at which tax bites, or a treaty gives India a lower rate, or expenses are allowable against the income, the amount deducted will exceed the tax due. The return is the only mechanism that recovers the difference. Clients regularly leave several years unclaimed, because the money was taken quietly and no demand ever arrived to prompt them.
My Indian rent is paid into an NRO account — is that correct?
Yes. Indian-source income belongs in the account designed for it, and rent is Indian-source however far away the landlord lives. Two things follow. Tax is deducted from the rent before it reaches you, calculated on the payment rather than on the profit you actually make after municipal charges, loan interest and repairs. And the balance then sits in an account that carries conditions on sending money abroad. Both are dealt with through the Indian return and the certification that goes with it, not by rerouting the rent into a different account.
How do I get credit in Canada for Indian tax deducted at source?
By claiming what was actually borne, not what was initially taken. Foreign tax credit is given for tax properly payable to the other country, so where India deducts more than the Indian return finally establishes as due, the credit follows the settled figure and the excess is recovered from India rather than claimed at home. This is the most common error we correct: the whole deduction claimed as a credit, no Indian return filed, and the excess never recovered from either side. Doing the Indian filing first and claiming the credit on the settled amount is the order that holds up.
Can I get back tax deducted at more than I owe?
That is what the Indian return is for, and the money is recovered rather than returned automatically. The steps are ordinary but unforgiving of gaps: reconcile the deductions recorded against you with what actually reached your account, establish the correct taxable figure for each year, file, and then follow the claim through. Where deduction was taken at a higher rate because the payer held no tax registration for you, that is corrected for the future at the same time. Older years close, so the practical question is usually which years are still open.
What is a totalization agreement and how do I use one?
A social security agreement that stops you contributing to two systems for the same work, and lets periods in both count towards benefit eligibility in either. Which system you stay in depends on the agreement's rules for your situation — a seconded employee usually remains in the home system for a set period, a locally hired one usually joins the host system. You evidence it with a certificate of coverage obtained before or shortly after the assignment starts. See certificates of coverage.
What is a double tax treaty and what does it actually do?
It is an agreement between two countries that divides up the right to tax. Article by article it decides which country taxes employment income, dividends, interest, royalties, pensions, property and business profits — and where both may tax, it caps what the source country can withhold and tells the other to give credit. It also breaks residence ties and opens a government-to-government channel for disputes. What it never does is apply itself: a treaty position is claimed. See our treaty work.
