Q.792 Is pension received in India

Taxable in Canada . . .

Question: Dear Sir, I am an NRI living in Canada. I am getting pension in India for retiring as a university lecturer in Tamilnadu and income tax is deducted by the bank that receives my pension. The money is still with the bank and I have not brought it to Canada. When filing income tax returns in Canada, do I have to show my Indian pension amount as income here? When I want to bring the money here, what formalities do I have to follow? My third question is, am I eligible to avail Canada old age pension when I turn 65 and eligible according to Canada rules but will be denied just because of my pension in India? I will be very thankful to your answers. Answer: As per Article 18 of the Double Tax Avoidance Agreement (DTAA) between Canada and India: ‘Pensions arising in a Contracting State shall be taxable only in that State.’ Even though this foreign pension income is exempt from Canadian taxes, it must be reported when filling your income tax return in Canada. I believe foreign pension income is reported on Line 115 of your tax return. To get the benefit of the DTAA you can claim a deduction for this by entering the pension amount on Line 256 of your tax return. While no tax applies in Canada on your Indian pension income, you cannot claim any refund in Canada for taxes deducted in India on your Indian pension income.

How to Transfer Indian Pension Income

Abroad - Repatriate Pension Income

Non Residents should be aware that repatriation of funds from India is done normally from NRO/NRE Accounts. If you are getting pension income deposited in India in a resident bank account then the first step would be to move the money to NRO/NRE accounts before repatriation is possible. NRI should be aware that they are not allowed to hold resident bank accounts in India. RBI now allows pension income like rent, dividend, pension, interest to be deposited in NRE accounts also. For information on how to transfer pension income received in India to a foreign country please refer to Question/Answer 431 titled ‘Have Pension received in India sent to USA’ the procedure is the same for USA* and Canada or for that matter any other overseas destination. Regards to your question on Canada old age pension. • Your Indian pension will not affect your eligibility for receiving Canadian old age pension. Simply because you receive an Indian pension you won’t be denied Canadian old age pension. • Your eligibility for Canada Old Age Pension would depends on not only reaching age 65 but also on residency. The residency requirements for Old Age Pension are: o If living in Canada must have resided in Canada for at least 10 years after turning 18. o If living outside Canada you should have resided in Canada for at least 20 years after turning 18. Some changes are in the works for Canada Old Age Pension plans starting in April 2023 but they should not affect you. *Please note taxation of foreign pension in USA is different than what the rules are in Canada. For more information see ‘Taxes on Indian Pension in the United States . . . Under DTAA Agreement’