It is that time of the year again. The law mandates everyone who has an active PIN to file their 2020 Income Tax returns on or before 30th June 2021.

The year of income for 2020 saw major amendments in tax laws. Most of the changes were aimed at cushioning taxpayers against detrimental effects of Covid-19. The Tax Laws (Amendment) Act(No.1) of 2020 that was effected on 25th April 2020 introduced new tax measures for individuals. These included 100% tax relief for persons earning Kshs. 24,000 and below, a reduction of the tax rate for the highest income band from 30% to 25% and increase of the personal relief from Kshs. 1,408 to 2,400 per month.

What this implies is that while filing the 2020income tax returns for employment income there are two different tax rates for January to March 2020 and April to December 2020. The personal relief for the two periods will be Kshs 1408 for January to March 2020 and Kshs 2,400 for April to December 2020.

The Income Tax Individual return template has been enhanced to capture employment income and pension contribution for January to March 2020 and April to December 2020 separately and apply the respective tax rates. The filing process technically remains the same except for Sheet F_Employment Income where you will be required to capture the total employment income, then break down the income and pension for the first three months (January to March 2020) then capture the total income and pension from April to December 2020 in the respective cells as shown below.

With just a few days to go you are encouraged to file your returns on time by logging in to https://itax.kra.go.ke/KRA-Portal/ and download the current IT1 return form (Version 18.0.3).

Taxpayers who did not have income in 2020 are required to file nil returns https://www.youtube.com/watch?v=Relu_cD-Hjs. Nil returns can also be filed on phone via the M-Service App, which is available on Google play store https://www.youtube.com/watch?v=1LDHpMIwfQs

Taxpayers who have other sources of income other than employment income are also required to file their returns and declare the income earned in 2020. A tutorial on how to file is available on YouTube https://www.youtube.com/watch?v=AO9iQKk2yYM&t=44s

Contrary to a popular opinion, filing of annual income tax returns is not a repetitive process. This exercise provides an opportunity for persons with more than one source of income besides employment income to declare other incomes for taxation purposes and those with employment income only to ensure that correct employment income and PAYE deducted by the employer was submitted to KRA. Having a P9 form issued by the employer is not enough proof that the employment income and PAYE deducted thereof was declared to KRA.

KRA is offering filing support in a number of ways like providing tax filing trainings to the various sector groups and taxpayers at large, providing online support through active call centers which receive and respond to any tax related queries and providing step-by-step guides and tutorials which are available on the website and YouTube channel. During this return filing season and the prevailing Covid pandemic we encourage all taxpayers to seek assistance through our virtual platforms.

Rhoda Wambui

Tax Education Officer