Your Indian employer must register for a Canadian payroll account number, because you (employee of Indian company) are physically working in Canada. This is known as a shadow payroll. As a result, Canadian payroll taxes should be deducted from your paychecks and remitted by your employer to the CRA. You should also receive a T4 (employment income) slip. To avoid double taxation, your Indian employer should reduce the TDS from your paychecks in India to account for the Canadian payroll taxes also being deduct – you should confirm this point with an India Chartered Accountant.
Until this is corrected, you have two choices:
1. Report the Indian Income as foreign source income on line 104 of your T1 Canadian Personal Tax Return, and claim a foreign tax credit on form T2209 of your Canadian tax return for the Indian taxes deducted. The CRA can challenge this approach, rightfully so, because the Indian Income is ‘Canadian source’, since you worked physically in Canada. Should they challenge this approach, the foreign tax credit will be disallowed, and you will be double taxed.
2. Have your employer issue a T4 slip for the past year, and correctly remit the Canadian payroll taxes as they were supposed to. This is the right approach, and you will not be double taxed. BUT, your Indian employer will be penalized for failure to remit payroll taxes on time, and will be responsible for recovering the Indian excess payroll taxes paid.