I am an NRI in UAE with 9 Cr in Equity market , 30L in FD, 70L in cash in account for expense and as reserve for any emergency. I recently received my PR from Canada and I plan to relocate in December 2025. I get on an average 30% annual returns on my portfolio which I normally reinvest. Will I be able to hold my investment after relocating to Canada and becoming a tax resident there? How will the tax implication on me on my Indian investments?

Ans: You have a well-diversified portfolio consisting of Rs 9 crore in equities, Rs 30 lakh in fixed deposits (FDs), and Rs 70 lakh in cash. This setup reflects careful planning, especially in terms of maintaining liquidity for emergencies and short-term needs. Your impressive average returns of 30% annually also indicate a high-risk tolerance and active portfolio management. You’ve been reinvesting your gains, further contributing to your portfolio growth.

Considering your upcoming relocation to Canada and your eventual status as a tax resident there, it is important to understand the tax implications and legalities of holding Indian investments while living in Canada.

Below are key insights and recommendations that address your concerns in a holistic manner.

Holding Indian Investments Post-Relocation
You will be able to hold your Indian investments after becoming a tax resident of Canada. However, the taxation rules and reporting requirements will change, both in India and in Canada. Your PR status in Canada may also impose stricter tax reporting guidelines. Below is a breakdown of what you can expect and possible modifications to consider.

Taxation in India for NRIs
As an NRI, the taxation on your Indian investments will continue under Indian laws. However, there are some nuances to be aware of:

Equity Investments: Long-term capital gains (LTCG) on equity investments exceeding Rs 1.25 lakh are taxed at 12.5%. Short-term capital gains (STCG) are taxed at 20%. These rates apply to NRIs as well, which means your equity portfolio will continue to attract the same tax rates in India.

Fixed Deposits: Interest earned from FDs is taxable in India at your income tax slab rate. For NRIs, TDS (Tax Deducted at Source) is higher, around 30%, which may reduce your returns.

Cash and Reserves: While having Rs 70 lakh in cash is a good buffer, it might not generate significant returns. Investing a part of it in more efficient liquid instruments, like liquid mutual funds or even certain safe debt instruments, may help optimize this allocation.

Taxation in Canada as a Resident
As a Canadian tax resident, you will need to report your global income, which includes income from your Indian investments. This brings additional tax burdens:

Double Taxation: Canada has a tax treaty with India, which helps in avoiding double taxation. However, you may still be liable to pay the difference in taxes if the Canadian tax rate on certain income is higher than what you paid in India.

Foreign Investment Reporting: You will be required to declare foreign-held investments to the Canadian authorities. This reporting will be detailed and stringent, especially since Canada monitors offshore investments closely.

Income from Indian Equity: Dividends and capital gains from Indian equity will be taxable in Canada. You may get a foreign tax credit for taxes paid in India, but if Canadian tax rates on these income streams are higher, you will pay the difference.

Evaluating Canadian Tax Impact on Your Investments
Canada has higher taxes on investment income than India. Some points to consider for your Indian investments include:

Capital Gains Tax in Canada: While capital gains in India on equities are relatively low, in Canada, 50% of your capital gains are included in your taxable income. This means if you continue earning 30% returns on your Indian portfolio, half of those gains will be added to your taxable income in Canada.

Dividends and Interest: Dividend income from Indian stocks or interest from FDs will be fully taxed in Canada as foreign income. Any TDS deducted in India will give you some relief, but you will likely pay more taxes in Canada.

Modifications for Tax Efficiency
Now that you're relocating to Canada, some changes in your investment strategy can improve tax efficiency:

Rebalance Your Portfolio: Since taxes on investment income are higher in Canada, you may consider rebalancing your portfolio to reduce the frequency of taxable events like capital gains and dividends. Instead, focus on long-term growth options.

Consider Switching to More Tax-Efficient Funds: You might want to look at investing in tax-efficient funds both in India and in Canada. For example, certain funds that focus on capital appreciation rather than regular dividend payments may reduce your tax liability in Canada.

Explore Canada-Specific Investment Products: Once you are a resident, investing in Canada-based products may offer better tax treatment and flexibility. Look into tax-free investment options like TFSA (Tax-Free Savings Account) for part of your savings.

Fixed Deposit Alternatives: The interest from Indian FDs will attract higher taxes in Canada. Consider switching to other income-generating assets that might be more tax-efficient in Canada.

Canadian Tax Reporting Requirements
Once you relocate, it is essential to familiarize yourself with the Canadian tax system. The Canadian Revenue Agency (CRA) mandates strict reporting of foreign assets and income. Failure to comply could result in penalties. Here’s what you should be aware of:

Form T1135: This form requires the disclosure of foreign investments over CAD 100,000. If your Indian portfolio exceeds this amount, you will need to report details of your investments, income, and gains each year.

Global Income Reporting: Canada requires you to report all global income, including capital gains, dividends, and interest earned from your Indian investments. Even if taxes are paid in India, you must report this income in Canada.

Investment Strategy Post-Relocation
Focus on Long-Term Investments: Since you plan to hold these investments for at least 20 years, staying invested in equity can continue yielding higher returns. However, shifting a portion into long-term, tax-efficient funds in Canada may help balance your portfolio.

Emergency Fund Optimization: Your Rs 70 lakh cash reserve is an excellent emergency fund. Post-relocation, you might want to consider moving part of this reserve into a liquid investment in Canada, which would allow easy access without the additional foreign tax implications.

Final Insights
You can continue holding your Indian investments after relocating to Canada, but the tax treatment will change. You'll have to manage the tax implications in both India and Canada, especially concerning capital gains, interest, and dividends.

Consider rebalancing your portfolio to optimize your tax efficiency as a Canadian resident, and explore Canadian investment products to further your financial goals. Keep a close eye on reporting requirements to avoid penalties.

Finally, maintaining a long-term view and seeking the right investment mix for both markets will allow you to maximize returns and manage tax obligations effectively.

Best Regards,
K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment