How to File Nil Returns for the First Time in Kenya

Filing your tax returns for the first time can seem like a daunting task, especially if you’re not familiar with tax terminologies and procedures. However, the process is simpler than you might think, particularly if you’re filing a nil return. A nil return is a type of tax return that you file when you have not earned any income in a financial year. As a student, unemployed person, or if you simply didn’t have any taxable income, this guide will walk you through how to file nil returns for the first time (KRA Source).

Understanding Nil Returns

Before we dive into the step-by-step process, it’s crucial to understand what a nil return is. If you are a Kenyan resident and have a Kenya Revenue Authority (KRA) Personal Identification Number (PIN), you are required to file an annual tax return. If you did not earn any income during the year, you are still obligated to communicate this to KRA by filing a nil return.

Filing a nil return is a legal requirement and a sign of tax compliance. It’s a way of informing KRA that you didn’t have any taxable income during a specific period.

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Step-by-Step Guide: Filing Nil Returns for the First Time

Step 1: Preparation

The first step in filing nil returns is preparation. You’ll need your KRA PIN and iTax password. If you’re a first-time taxpayer, you might have recently acquired your KRA PIN. Your KRA PIN is a unique personal identifier that KRA uses to track your tax transactions. Your iTax password, on the other hand, is what you use to access your iTax account.

Step 2: Access the iTax System

Once you have your KRA PIN and password ready, visit the KRA iTax portal. Enter your KRA PIN, click on ‘Continue’, and then enter your password and the arithmetic sum of the security stamp. Once you’ve entered these details correctly, you’ll be able to log into your iTax account.

Step 3: Navigate to Returns

After logging into your account, navigate to the ‘Returns’ tab on the menu. A drop-down menu will appear. Select ‘File Nil Return.’

Step 4: Filing the Nil Return

After clicking ‘File Nil Return,’ a new page will open. You’ll be required to select the ‘Tax Obligation’ (choose ‘Income Tax – Resident Individual’) and enter the return period (this is usually the previous financial year). Once you’ve filled in this information, click ‘Submit.’

Step 5: Download the Receipt

After submitting the nil return, a pop-up message will appear, confirming that your nil return has been submitted successfully. An acknowledgment receipt (e-Receipt) will be generated. Download this receipt and keep it safe, as it serves as evidence of your tax compliance.

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The Importance of Filing Nil Returns

Filing nil returns is not just about fulfilling a legal obligation. It’s about being a responsible citizen and contributing to the functioning of your country. Even if you didn’t earn any income, by filing your nil returns, you’re keeping your tax records up to date and avoiding unnecessary penalties.

As of my last update in September 2021, the penalty for not filing a nil return was KES 20,000. By spending a few minutes filing your nil returns, you’re avoiding this penalty and ensuring you remain in good standing with KRA.

Conclusion

Filing nil returns doesn’t have to be a daunting task. Even as a first-time filer, you can successfully file your nil returns by following these simple steps. Remember, filing your tax returns, whether nil or income, is a crucial part of your civic duty.

In case you encounter challenges while filing your returns, don’t hesitate to reach out to KRA for assistance. They have customer service desks at Huduma Centres countrywide and a customer contact center that you can reach via phone or email.

Also, it’s important to note that the deadline for filing tax returns in Kenya is 30th June of the following year. Ensure you file your returns before this deadline to avoid penalties and remain compliant with tax laws.

By understanding your tax obligations and meeting them promptly, you will be contributing to Kenya’s development and ensuring your financial future is secure. After all, good tax habits are part of good financial habits. So start on the right foot – file your tax returns, even if they are nil, and keep yourself in the clear with KRA.

In the future, when you start earning an income and need to file an income tax return, you’ll already be familiar with the iTax system and the process of filing returns. This experience will make the transition smoother and less intimidating.

In conclusion, filing your nil returns is an easy process that plays a significant role in maintaining your tax compliance. It’s a small step, but it is indeed a leap in your journey towards financial responsibility. Remember, every step counts, no matter how small it may seem. So go ahead, file your nil return, and step confidently into the world of tax compliance!



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