2020 Income Tax Returns | Audit and Accounting Firm in Kenya

Have you filed your 2020 income tax return? Worry not. You still have 12 days to go.

Income tax is a direct tax that is imposed on income derived from Employment for both residents and non-residents, Business, Rent, Dividends, Interests and Pension.

Individual Income Tax

Individual Income Tax is charged for each year of income on all the income of a person, whether resident or non-resident, which is accrued in or was derived from Kenya.

What do I need to file income tax.

The first requirement is having a functional KRA PIN number and a password.

If employed one needs a valid P9 form from the employer.

If you have other income you need to have financial records for the income in order to declare the exact income for tax purposes.

How do I file for individual Income Tax Returns?

Submission of income tax returns is an online process done via iTax.

If you have no income to declare, you are required to file a NIL return. You can now file a NIL return using the new KRA M-service App.

For those with employment income only, one requires a P9 form from the employer to file Income Tax by logging in to iTax portal and filling in the details as required.

For those who have other incomes other than employment like, business income, dividends and any other income one is required to declare the same for tax purposes.

Filling income tax can sometimes be a problem to most people due to lack of technical know-how in tax matters. At Ronalds LLP we have the technical expertise to help you file your tax in an efficient way.

What is Tax Relief?

A tax relief is an incentive that reduces the amount of tax that a person should pay.

Types of Tax Relief are:

Every resident individual is entitled to a personal relief of Ksh. 28,800 per annum         ( Kshs. 2,400 per month) effective 25th April, 2020.

Every resident individual is entitled to an insurance relief of 15% of the amount of premiums paid for self, spouse or child. However, it shall not exceed Kshs. 60,000 per annum (Kshs. 5,000 per month).

Insurance relief applies in the following policies;

  • Life Insurance
  • Education Policy with a maturity period of at least ten years.
  • Health Insurance.

How do I pay Individual Income Tax?

After filing the return online via iTax, generate a payment slip and present it at any of the appointed KRA banks to pay the tax due.

You can also pay via Mpesa by generating payment slip and sending the KRA Pay bill number 572572.

The Account Number is the Payment Registration number quoted at the top right corner of the generated payment slip.

Tax Exemption.

People with disability are granted a tax exemption on their income for the first Ksh.    150,000 of their monthly income.

N/B: If you’re exempted from Individual Income Tax you are still required to file returns and enter a valid Exemption Certificate Number.

Penalty for late filling and paying.

Date: Income Tax Returns should be filed on or before 30th June of the following year.

Penalty on late filing: Whichever is higher between, 5% of the tax due or Kshs. 2,000.

Penalty on late payment: 5% of the tax due and a late payment interest of 1% per month on the unpaid tax until the tax is paid in full.

Audit and Accounting Firm in Kenya

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