What tax is withheld on Indian dividends for an NRI in Canada?

India withholds 20% under Section 195. For Canadian NRIs, the India-Canada treaty's lower dividend rate is written for companies holding a large stake in the Indian payer, so individual investors get no reduction and pay the 20% domestic rate. The real relief is the foreign tax credit you claim on your Canada return for that Indian tax.

Can I reduce the tax withheld on my Indian dividends?

Not through the India-Canada treaty if you're an individual investor — the treaty's lower rate applies only to substantial corporate holdings, so you stay at the 20% domestic rate. What does help is the foreign tax credit: when you report the dividend on your Canada return, you claim a credit for the Indian tax already deducted, so you aren't taxed twice on the same income.

Canada NRIs · Dividend Tax

Dividend tax on Indian shares for NRIs in Canada

Dividends from Indian companies are withheld at the non-resident rate before they reach you in Canada — here's the treaty position and how to reclaim any excess.

When an Indian company pays you a dividend while you live in Canada, the company withholds tax at source before the money reaches you. India's default withholding on non-resident dividends is 20% under Section 195. The India-Canada treaty position on dividends is nuanced: the lower treaty rate is reserved for substantial corporate shareholdings, so individual investors get no reduction and simply pay the 20% domestic rate (Article 10(2) is bifurcated: 15% only when the recipient is a COMPANY owning ≥10% of the Indian payer's voting power). The lever that does help is the foreign tax credit on your home-country return.

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India-Canada key facts: dividend tax

Default Section 195 rate	20%
India-Canada DTAA treaty rate	20%
Your saving via the treaty	No rate reduction — see note below
Treaty article / basis	Article 10(2) is bifurcated: 15% only when the recipient is a COMPANY owning ≥10% of the Indian payer's voting power
Your TRC issuing authority	Canada Revenue Agency (CRA)

Rates reflect India's domestic Section 195 withholding and the India-Canada treaty. Surcharge and cess apply on top where relevant.

How it works on the India side

Since the 2020 shift back to classical dividend taxation, dividends from Indian companies are taxable in the shareholder's hands and the company deducts TDS before paying. For a non-resident the default is Section 195 at 20% (plus surcharge and cess). Whether a treaty rate is available depends on the specific treaty — for many countries the lower dividend rate is written only for companies holding a large stake in the Indian payer, which means individual portfolio investors stay at the domestic rate.

Where a lower individual rate does apply, you claim it with Form 10F and a Tax Residency Certificate lodged with the company or broker, and any quarter withheld at the higher rate before your paperwork was on file is reclaimed through your Indian return. Where no lower rate applies, the dividend still goes on your return, and the real relief sits on your home-country side as a foreign tax credit for the Indian tax already paid.

What changes because you live in Canada

Canada taxes worldwide income, so this Indian income goes on your T1 with a foreign tax credit (line 40500 federal via Form T2209, plus a provincial foreign tax credit on Form T2036) for the Indian tax paid. Indian assets over CAD $100,000 in cost amount must be disclosed each year on Form T1135, the CRA already receives your Indian account data through CRS, and a deemed-disposition departure tax (s.128.1) can crystallise on the day you give up Canadian residence — so the India-side rate is only part of the planning.

Frequently asked questions

Common questions from Canadian NRIs

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NRI ITR for interest, rent and dividend income Canada NRI tax guide — all income types & DTAA rates

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