Moving Back to India from Canada: The Tax Checklist Before You Book the Ticket

By Abhinav Chhabra, Ledger Brigade | 19 October 2026

Emigration from Canada is running near record levels. Statistics Canada's estimates put departures by citizens and permanent residents at about 120,000 in 2025. For many Indo-Canadian families and professionals, the destination is home: India.

The move is the easy part. Tax is harder: Canada settles up on the way out, and India needs to know when you became resident again. Get the order wrong and you can pay tax on gains you never cashed.

What happens when you leave Canada

1. You're treated as selling most of what you own (departure tax).
On the day you stop being a Canadian resident, the CRA treats you as having sold most of your property at fair market value and bought it straight back. You report the gain on that deemed sale on your final return, using Form T1243.

The main exclusions:

• Canadian real estate, such as your house or condo
• Canadian business property used through a permanent establishment in Canada
• RRSPs, RRIFs, TFSAs, RESPs, RDSPs, pensions and certain life insurance
• For recent arrivals: property you owned when you last became a resident of Canada, if you were resident for 60 months or less in the 10 years before leaving. This matters for many newer PRs who arrived holding shares, mutual funds or property in India.

2. You may have to list everything you own.
If the fair market value of your property is more than $25,000, you must file Form T1161 with your final return. Cash, registered plans, and personal-use property worth less than $10,000 each are left out of that total. The late-filing penalty is $25 a day, with a minimum of $100 and a maximum of $2,500, even if you owe no tax.

3. You can defer the tax.
Form T1244 lets you defer the departure tax, interest-free, until you actually sell. The election is due by April 30 of the year after you leave. If the federal tax you're deferring is more than $16,500, the CRA needs security.

4. Your registered plans stay, with new rules.

• RRSP/RRIF: you can keep them. Withdrawals while you're non-resident face 25% non-resident withholding, unless a treaty lowers the rate.
• TFSA: you can keep it, but any contribution made while you're non-resident is taxed at 1% a month until you withdraw it. India doesn't recognize the TFSA's tax-free status, so its income may be taxable in India once you're ordinarily resident there.

5. Your pensions follow you, with conditions.
CPP can be paid abroad. OAS continues outside Canada only if you lived in Canada for at least 20 years after age 18. Periods counted under the Canada-India Social Security Agreement, in force since August 1, 2015, can help you meet this. Otherwise payments stop six months after you leave. Under Article 18 of the Canada-India tax treaty, pensions arising in Canada are taxable only in Canada.

6. Your condo isn't deemed sold, but renting it out changes things.
Your tenant or property manager must withhold 25% of gross rent, unless you file an NR6 to have withholding based on net rent and then file a section 216 return. When you eventually sell, the buyer will want a section 116 clearance certificate.

What happens when you arrive in India

Under India's Income-tax Act, 2025, you're resident for a tax year (April to March) if you meet either test:

• you spend 182 days or more in India, or
• you spend 60 days or more in the year, and 365 days or more over the previous four years.

Special rules apply to Indian citizens and persons of Indian origin on a visit, including a 120-day test when Indian-source income is above ₹15 lakh.

Many returning NRIs are first Resident but Not Ordinarily Resident (RNOR). You're RNOR if you were non-resident in nine of the previous ten years, or spent 729 days or fewer in India over the previous seven years. An RNOR is generally taxed on Indian income, plus foreign income only from a business controlled or profession set up in India. Other foreign income generally stays outside Indian tax.

Not sure of your status? Use our free NRI / RNOR residency checker: answer a few questions and see whether you are a Non-resident, RNOR or Resident for tax year 2026-27, with the exact rule that decides it.

Under FEMA, your NRE and FCNR deposits need to be redesignated (for example as resident or RFC accounts) once you become resident. Tell your bank.

The numbers at a glance

Worked examples

These examples are hypothetical and illustrative. They assume a 50% capital gains inclusion rate and an approximate marginal rate, and they ignore provincial differences.

Example 1: established family. Raj and Priya have lived in Toronto for 14 years and move to Pune on December 15, 2026. Raj has a non-registered portfolio worth $180,000 with an adjusted cost base of $120,000.

• Deemed gain: $60,000. Taxable at 50%: $30,000.
• At roughly a 30% marginal rate, departure tax is about $9,000.
• That's under the $16,500 federal-tax threshold for security, so Raj could elect on T1244 to defer it until he actually sells.
• His $95,000 RRSP isn't deemed sold. If he later withdraws it all as a non-resident, $23,750 (25%) is withheld.
• They keep the Toronto condo and rent it at $2,500 a month. Without an NR6, $625 a month is withheld.

Example 2: recent PR. Ankit became a PR in 2022 and holds Indian mutual funds he bought before he came. He leaves in 2026, having been resident for under 60 months. Those Indian funds are not deemed sold on departure. Any Canadian ETFs he bought after arriving are.

Action checklist

1. Fix your departure date. It decides your last Canadian tax year and your first Indian residency year. Canada looks at your residential ties (home, spouse, dependants), not just a flight date.
2. Build an asset list showing cost and current value. You'll need it for T1161 and T1243.
3. Decide on deferral. File T1244 by April 30 if it makes sense for you.
4. Registered plans: stop TFSA contributions before you leave, and plan the timing of RRSP withdrawals with advice in both countries. Whether India also taxes them depends on your residential status in India at the time.
5. Property: file an NR6 before the first rent payment if you'll rent it out, and plan for section 116 on a future sale.
6. Pensions: check OAS eligibility and apply for a Canada-India totalization assessment if you need it.
7. India: track your days, confirm your RNOR status each year, and redesignate your NRE/FCNR accounts.
8. Tell CRA your departure date, and stop Canadian benefits such as CCB and the GST/HST credit.

Frequently asked questions

Can I keep contributing to my TFSA from India? No. Contributions made while you're non-resident are taxed at 1% a month until they're withdrawn.

Is my Toronto home subject to departure tax? No. Canadian real property is excluded. Renting it out or selling it later has its own rules.

Will I still get CPP and OAS in India? CPP, yes. OAS only if you meet the 20-year residence rule, either directly or using the Canada-India agreement.

How long does RNOR status last? It depends on your history, and you test it each tax year. Many returning NRIs keep it for one to three years.

Talk to us

Planning a move to India in the next year? Email hello@ledgerbrigade.com or book a free diagnostic call. We'll help you organize your records, asset list and books on both sides before you go. The call is general guidance only, not preparation or review of a tax return.

Disclaimer: This article is general information, not tax or legal advice. Residency in both countries depends on your facts. Treaty treatment of RRSP and TFSA income can be complex. Speak to qualified tax professionals in Canada and India before you move.

Sources

• CRA, Dispositions of property for emigrants: canada.ca
• CRA, RRSP withdrawal withholding rates: canada.ca
• CRA, Tax on non-resident TFSA contributions: canada.ca
• Income Tax Department of India, Non-resident residency rules: incometax.gov.in
• Canada-India tax treaty (Government of Canada treaty text, Article 18): treaty-accord.gc.ca
• Steps to Justice (OAS abroad): stepstojustice.ca
• Statistics Canada emigration estimates (as reported by The Hub, June 2026): thehub.ca