On an annual basis, every person is obligated to file the income tax returns within the set due date. and it is important to always be informed about the deadlines to avoid being caught unawares. This applies to both resident to non-resident persons whose income were or accrued or derived from Kenya. For individual, the year for income is twelve months beginning from January 1st to December 31st. However, the tax due should be paid on or before 31st April while the tax return itself must be filed on or before 30th June of the subsequent year.
Tax Procedures Act, defines penalties for offenses relating to filing of income tax return; penalties for filing income tax return late or after due date is now ksh.2000.00 or 5% of tax due whichever is higher for every year missed. In addition, failing to file a tax return may prompt commissioner to issue default assessment.
Paying income tax after due date attracts late payment interest at a rate of 1% Per Month. Interest is computed from the date tax was due to date it’s paid using simple interest.
Therefore, tax due will be the aggregate of the principle, interest and penalties.
Individual Return VS TOT.
It is worth mentioning that an individual who declares business income under TOT regime, is not obligated to file annual tax returns if they don’t have income from other sources.
Tax Deduction & Reliefs
Whilst filing income Tax returns there are deductions that individual taxpayers enjoy.
Deductions reduce the gross income to arrive at taxable income, example of applicable deductions are; contributions to pension scheme, contributions to home ownership savings plan, interest on mortgage. Persons with disability enjoy a deduction of ksh. 150,000.00 per month.
Reliefs reduces the tax due to arrive at tax payable. Individual tax payers with life or education insurance policy are entitled to tax relief or ksh. 15% of annual premium. NHIF is coming now to the fold.
Tax credit are tax claims of tax already paid. while computing final tax, tax credit like reliefs reduces the tax due to arrive at tax payable. Examples of tax credit are withholding taxes, advanced tax and instalment tax.
Tax refunds occurs where taxes paid are in excess of tax due. Tax refund is due and payable to the tax payer. the complete picture of how much refund is due is obtained by filing income tax return at the end of the year. Refund is applied through iTax system
Tax compliance is simply being in good books with tax man, the proof is to generate a tax compliance certificate (TCC). TCC is required in obtaining business deals with government institution or employment and promotions. Being Compliant gives you advantage to be authorized economic operator leading to faster clearance goods at ports.
Returns are filed online via the KRA iTax platform to promote transparency and accountability. Consequently, it has now become quite easy to file the returns, and having immediate confirmation that the process has taken place even makes the process more efficient.
At CalibreCode, we can assist you in providing more in-depth information about issues associated with taxation and we even assist you to file your returns.