Q736. Pension received in India is

exempt from tax in Canada - DTAA

Question: Sir, I am a Indian army pensioner exempted IT on my pension under section 10 of IT rules being GALLANTRY AWARDEE. I file my IT return in India but pay no IT being exempt. I have now moved to Canada & and become resident of Canada. Under double taxation treaty will my Indian pension be included for charging IT by Canadian revenue agency once I show my income under world income in Canada?what procedure should I follow so that I don't pay IT on my Indian pension in Canada. regards, ksg Answer: Generally foreign pensions are taxable for Canadian residents. However, Double Tax Avoidance Agreements (DTAA) between countries helps avoid paying dual taxes to some extent. Canada and India do have a tax treaty. Pensions are dealt with in Article 18 of the Canada/India DTAA which states: 1. Pensions arising in a Contracting State shall be taxable only in that State. 2. Pensions shall be deemed to arise in a Contracting State when the payer is that State itself, a political subdivision, a local authority or a resident of that State Hence as far as India & Canada taxes are concerned, Pension income is taxed where it arises (in your case in India). So pension received from India would be exempt from taxes in Canada. However, such pension income should still be declared when filing a Canadian tax return under ‘Other pensions and superannuation on line 115 of Canadian tax return forms. Then a deduction for the same amount can be claimed under other deductions on line 256 of Canadian tax forms. Revenue Canada tax return forms usually show a 800 toll free number where you can call for help to your questions and get current tax rules information.