I am a Canadian Resident that just sold my house in India and I understand I can repatriate the proceeds in INR converting to US$ or CDN$ in my NRE account and then move it to my Canadian Bank. Which currency should I convert INR to ? What are the pros and cons?
A sales proceed in India cannot be credited to NRE Account. There are limitations to credit of funds in NRE, broadly the money has to come from outside India in designated currencies.
As the funds you have are due to sale of Capital Asset, the Rupee is not fully convertible on account of Capital. You need apply for relevant permissions with RBI under FEMA before you repatriate the funds.
A CA will be able to help you complete the formalities.
The CDN$ is not traded in India and you would be able to rate shop a bit better with USD. However if in the end you need another conversion from USD to CDN$, then it defeats the purpose. Converting into CDN$ in India would be more tedious.
The capital gains on the sale of the house are taxable income to you in India and you cannot repatriate the proceeds without a certificate from the Income Tax Department (a Chartered Accountant (CA) can help you obtain this) that the tax has been paid/withheld. In some circumstances, you can invest the proceeds in specified bonds issued by quasi-governmental agencies (Rural Electrification Authority?) for a period of three years (earning a lower rate of interest than is available on the open market), in which case no capital gains tax is assessed or payable. The interest on these bonds is taxable income to you, though. After three years, you can repatriate the entire proceeds (subject to a limitation of $100,000? per year) back to Canada.