The traditional Theory of fiscal federalism lays out a general normative framework for the assignment of functions to different levels of government and the appropriate fiscal instruments for carrying out these functions. This Theory contends that the central government should have the basic responsibility for the macroeconomic stabilization function and for income distribution in the form of assistance to the poor. Decentralized levels of government have their responsibility in the provision of goods and services whose consumption is limited to their own jurisdictions. The present paper makes attempt to bring out the comparision of both India and Canada’s federal fiscal structure and the lesions to learn each other.