Many Kenyan taxpayers are unaware they may qualify for tax refunds from the Kenya Revenue Authority (KRA). This explainer covers deductions, reliefs, and the process to claim overpaid taxes.
The Kenya Revenue Authority (KRA) is urging Kenyans to file their taxes and ensure key taxation documents align with procedural and legal requirements. However, some taxpayers face challenges with aspects like refunds.
Tax deductions are amounts subtracted from taxable income before tax calculation. For example, if you earn Ksh80,000 per month and qualify for Ksh10,000 in deductions from pension or NSSF contributions, your taxable income drops to Ksh70,000, on which tax is then calculated.
Common deductions include contributions to registered pension or provident funds, SHA premiums, NSSF contributions, and certain business-related expenses for self-employed individuals. Maintaining proper records and receipts is crucial when claiming these.
Reliefs are credits applied against the tax payable. The standard personal relief for PAYE taxpayers is Ksh28,800 per year or Ksh2,400 per month, automatically deducted by employers in monthly PAYE computations. Other reliefs cover insurance on life or health policies and mortgage interest for homeowners.
Certain reliefs and deductions are capped by statutory limits. For instance, contributions to retirement funds and insurance premiums cannot exceed amounts permitted under KRA guidelines to qualify as deductible.
Tax refunds represent KRA repayments of excess tax paid. Overpayment often results from unapplied reliefs or deductions in PAYE calculations, or when provisional tax payments during the year surpass the actual liability after filing returns.
Claiming a refund begins by logging into KRA’s iTax system. Review your submitted returns to confirm all eligible reliefs and deductions were correctly applied. Overpaid amounts can then be requested via iTax.
Essential documents are required. For personal reliefs like insurance or mortgage, submit copies of premium payments or interest statements. For business expense deductions, provide invoices, receipts, and bank statements as proof.
The steps to submit a refund claim on iTax are:
- Log in to the iTax portal using your KRA PIN and password.
- Go to the Refunds or Apply for Refund section on the dashboard.
- Select the relevant tax obligation, such as Income Tax–Individual, PAYE, or VAT.
- Specify the tax period or year of the overpayment.
- Enter the claimed refund amount as shown in filed returns.
- Provide a brief reason, like overpayment from unclaimed reliefs or excess provisional tax.
- Upload supporting documents, including return acknowledgments, payslips, insurance certificates, mortgage interest statements, receipts, or bank statements.
- Submit the application for KRA verification.
Once submitted, KRA reviews the application and may request additional information or clarification before approval or rejection. Refund timelines vary based on KRA’s verification process, which confirms the validity and documentation of claimed reliefs and deductions. Accurate record-keeping accelerates the process.
Common delays stem from incomplete documents, claiming non-deductible expenses, or failing to reconcile PAYE with actual tax liability. Double-check all entries before filing.