SURREY, B.C. - Many Surrey families own a house, plot or flat in India, often inherited or bought before moving to Canada. Selling it is not a one-country transaction. Two tax systems care about the same sale, the money moves through regulated channels, and the paperwork decides how much of the price actually reaches you.
India’s side: expect withholding before you see the money
When a non-resident sells immovable property in India, the buyer is generally required to withhold tax before paying the balance. That obligation for payments to non-residents sits in Section 195 of India’s Income-tax Act, 1961 (carried into the Income-tax Act, 2025 as Section 393(2) from April 1, 2026), and the withholding is calculated on the seller’s capital gains at the rates in force, not the simple 1 per cent rate that applies when the seller is an Indian resident. The withheld amount is not necessarily your final Indian tax; it is reconciled when you file in India, which is one reason sellers keep every document from the sale.
Moving the proceeds out of India is also regulated. Under the Reserve Bank of India’s Master Direction on Remittance of Assets, non-resident Indians and persons of Indian origin can remit up to US$1 million per financial year out of NRO account balances, sale proceeds of assets, or inherited assets, with supporting documents. Remitting more than that in a financial year requires prior RBI approval. Plan the timing before the sale closes, not after.
Canada’s side: world income means this sale goes on your return
If you are a Canadian tax resident, the Canada Revenue Agency’s rule is simple to state and easy to overlook: you report income from sources inside and outside Canada. A capital gain on an Indian property is world income for a Canadian resident, and it belongs on your Canadian return for the year of the sale.
The system has a relief valve. If you paid tax in India on income you are reporting in Canada, you may be able to claim a federal foreign tax credit, calculated on Form T2209 and claimed at line 40500, with a possible parallel provincial credit. The credit depends on the details of both returns, which is why the Indian filings and the Canadian filings have to be prepared with each other in view.
What it means for you
Treat an Indian property sale as a two-country project: confirm the title and documents early, budget for withholding in India before the balance is paid, plan any repatriation around the US$1 million per financial year channel, and tell your Canadian tax preparer about the sale in the year it happens, not at some later tidy-up. Cross-border property and tax situations are fact-specific, and mistakes here are expensive to unwind. This article is general information only, not tax or legal advice; get advice from qualified cross-border professionals in both countries before you sign anything.
(Source: Reserve Bank of India, Master Direction on Remittance of Assets, and Canada Revenue Agency guidance on residents’ world income and foreign tax credits, accessed November 7, 2026)
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