Question ID :
44842
082701
if a NRI is having loss on house property in India can it adjust foreign salary income with it in Canada
Posted by
Mahesh Kumar
on
Apr 24, 2025
Filed Under
DIRECT TAXES
It may be possible, but only if the foreign property income/loss is properly reported under Canada tax laws
Posted by
CA. SURAJ KUMAR CHOUDHARY on
Apr 28, 2025
Answer ID :
85837
For a non-resident Indian (NRI) with a house property loss in India, the ability to adjust this loss against foreign salary income in Canada depends on the tax residency status and the specific tax laws of each country:
In India:
> Loss from house property (e.g., rental loss after deductions) can be carried forward for 8 years under Section 71B of the Income Tax Act, but only against future Indian income (e.g., rental income, capital gains, or other Indian-sourced income).
> No adjustment against foreign income: Indian tax laws do not permit offsetting Indian losses against foreign-sourced income (e.g., salary earned in Canada).
In Canada:
> Residency status: If the NRI is a Canadian tax resident, worldwide income (including foreign salary) is taxable in Canada. However, foreign property losses (e.g., from Indian real estate) are generally not deductible against Canadian employment income unless the property is classified as a business or investment asset generating taxable income in Canada (which is uncommon for personal-use property).
> Non-resident status: If the NRI is a Canadian non-resident, only Canadian-sourced income is taxable, and foreign losses (including Indian property losses) are irrelevant for Canadian tax purposes.
Key Considerations:
> Double Taxation Avoidance Agreement (DTAA): The India-Canada DTAA does not provide for cross-border loss adjustments. Each country taxes income/losses arising within its jurisdiction independently.
> Documentation: Losses must be properly documented in India to carry forward, while Canadian tax filings require clear disclosure of foreign property ownership and income.
Conclusion:
An NRI cannot adjust Indian house property losses against Canadian salary income in either country’s tax regime. Losses remain jurisdiction-specific and must be utilized within the respective country’s tax framework.
Posted by
CA NIKHIL JAIN on
Apr 28, 2025