How to File a Return for a Salaried Employee in Kenya

Navigating the tax landscape can seem daunting, particularly if you're a salaried employee who's filing tax returns for the first time. However, the process isn't as intimidating as it seems. In this article, we'll walk you through the process of filing a return for a salaried employee in Kenya, and we'll also discuss how to account for withholding tax.

Understanding the Basics: What is a Tax Return?

First things first, what is a tax return? A tax return is essentially a document that declares your taxable income, deductions, and other tax-related details to the tax authorities, in this case, the Kenya Revenue Authority (KRA). As a salaried employee, you're required by law to file an annual tax return.

Read Also: How to File Nil Returns

The Role of the P9 Form

As a salaried employee, your employer should provide you with a P9 form at the end of the financial year. This form details your income and the tax deducted throughout the year by your employer. The P9 form is a critical document needed when filing your tax returns.

The iTax System

Filing tax returns in Kenya has been simplified through the introduction of the iTax system by KRA. This online system allows you to file your returns from the comfort of your home or office.

Now let's get into the step-by-step guide on how to file your tax returns as a salaried employee.

Step-by-Step Guide to Filing Your Tax Returns

Step 1: Prepare Your Documents


Before you start, make sure you have the necessary documents at hand. These include your P9 form and your KRA PIN. You'll also need your iTax password to log into the system.


Step 2: Access the iTax System


Log into the iTax system using your KRA PIN and password. If you don't remember your password, there's a 'Forgot Password' option that allows you to reset it.

Read Also: How to File KRA Nil Returns for a Company


Step 3: Navigate to Returns


Once logged in, navigate to the 'Returns' menu on the dashboard and select 'File Returns.'


Step 4: Select the Right Form


You'll be required to select the type of returns you want to file. For salaried employees, select 'Income Tax - Resident Individual.'


Step 5: Fill Out the Return Form


At this stage, you'll download an Excel tax return form. Fill out the sections as required using the information from your P9 form. The 'Basic Info' sheet is mandatory, and you'll also need to fill out the 'Employment Income' sheet.

How to Account for Withholding Tax

In some instances, you might have withholding tax, which is an amount withheld by the party making a payment to you and remitted directly to the KRA. If you've had withholding tax deducted, you'll need to include this in your tax returns.

Withholding tax can be accounted for in the 'Tax Computation' sheet of the tax return form. There's a section for 'Credit for Tax Paid at Source,' where you can input the amount of withholding tax paid. This amount will be offset against your tax due, potentially reducing your tax liability.

Read Also: How to File KRA Returns using my Phone

Step 6: Validate and Submit the Form

After filling out the form, validate it and generate a zip file. Then, upload the zip file back to the iTax system, agree to the terms and conditions, and click 'Submit.' An acknowledgment receipt will be generated, which you should download and keep for your records.

Post-Submission: What's Next?

After you've submitted your tax return, it's time to wait for the KRA to process it. Typically, if you've filled out everything correctly and you don't owe any extra tax, that's it – your job is done until the next year.

However, if the KRA finds any errors or if you owe additional tax, you will be notified. In some cases, if you've paid more tax than necessary (usually through tax deducted at source or withholding tax), you could be due for a tax refund.

Remember Your Due Dates

The deadline for filing tax returns in Kenya is usually June 30th of each year. It's best to file your return well in advance of this deadline to avoid a last-minute rush and potential penalties for late filing. The penalty for late submission of an individual tax return was KES 2,000.

Keep Your Records

Even after you've filed your tax return, it's crucial to keep your records, such as your P9 form and a copy of your filed return, in a safe place. If the KRA has any queries or if there are discrepancies in future returns, these documents will be invaluable.

Conclusion

Filing your tax return is a vital part of your responsibilities as a salaried employee, and while it might seem daunting, the process is more straightforward than you might think. With the right preparation, a clear understanding of the process, and a careful approach, you can file your return without any hassle. Remember, staying tax compliant not only helps you avoid penalties but also contributes to the development of the nation. Let's pay our taxes and play our part in building Kenya.

FAQs

How do I download P9 forms for employees?


The P9 form is typically provided by the employer to the employee at the end of the financial year for tax return purposes. As an employer, you can download P9 forms for your employees from the KRA iTax portal. Here's a step-by-step guide:

- Log into your iTax account using your PIN and password.


- Navigate to the "Employers" menu and select "P9 Forms."


- In the new page, select the year for which you want to download the P9 form.


- After selecting the year, click "Generate" and the system will generate the P9 forms for all your employees.


- Once generated, you can download the P9 forms and distribute them to your employees.

How is tax payable on taxable salary calculated in Kenya?


Kenya operates a progressive tax system for resident individual taxpayers. The tax bands are as follows for PAYE:

- The first Kshs. 24,000 - 10%


- The next Kshs. 16,666 - 15%


- The next Kshs. 16,667 - 20%


- The next Kshs. 16,667 - 25%


- Over Kshs. 74,000 - 30%

To calculate tax payable on taxable salary:

- First, determine your gross income. This is your total income before any deductions.


- Subtract the personal relief. The personal relief is Kshs. 2,400 per month or Kshs. 28,800 per year.


- The result is your taxable salary.


- Apply the above tax bands to your taxable salary to calculate the tax payable.

Please note that this information is accurate as 2023, and you should check the most recent tax bands and rates from the KRA or a reliable tax advisor.
https://cyberdimension.click/how-to-file-a-return-for-a-salaried-employee-in-kenya/