KRA Nil Returns: As long as you have a PIN in Kenya you are required to file returns. The returns could be done monthly or yearly depending on the type of tax you have been registered in. When you have a tax obligation but have no income to declare against it you can file a KRA nil return to avoid any penalties that may arise due to unfiled tax return.
When to file KRA Nil returns
Some of the people who can file nil returns include students, unemployed persons, company that have no sales to declare, etc. Many students and unemployed Kenyans have made an assumption that they are not supposed to file any returns but they should file nil returns until the time they will get any source of income.
Nil returns for income tax should only be filled once per year. The deadline for filling this return is 30 June of the following year in which you are declaring income. For instance, if you are filling a nil return for year 2019, beginning January 2019 to December 2019 you will need to file your nil return by the end of 30 June 2020. KRA has given an allowance of six months for you to file the nil return
Note: You cannot file a nil return of year 2019 before the year ends. For instance you can file 2019 return in October 2019. It can only be filed from 1st January 2020-30 June 2019 and after the deadline any nil return will attract penalty
Business operating as sole proprietor, partnership, limited company could have other tax obligation such as of Value Added Tax, Excise duty, PAYE etc. These taxes can also be filled for nil returns in cases where no sale or transaction was made but the deadline vary depending on the tax. VAT and Excise duty nil return should be filled every 20th following the month in which you are declaring the transaction. Income tax PAYE nil returns shoul be filled by 9th of the next month in which PAYE was to be paid.
You may also like: How to login to KRA iTax
Reason why you should file KRA Nil returns
The reason why you should file KRA nil returns is to avoid penalties. As long as you have a PIN its means that the PIN number came with a certain tax obligation especially income tax for individual and for business other taxes may arise
Penalties for not filing Nil Income tax return
There are penalties for not filing KRA nil income tax returns. For individual the penalty is Kshs 2000 per year. For companies or any other registered body the penalty of not filing nil return when needed to is Ksh 20,000/= since there is no tax payable.
On other side the penalty for not filing VAT nil returns is Kshs 10,000.
How to file KRA Nil Income tax return
Step to step guide on how to file nil income tax returns on iTax portal
1. To login to your iTax account visiting KRA portal: https://itax.kra.go.ke
Note: for those who have never updated their iTax page they will need to do so before filing any return. PIN issued under the old system will also need to be updated, so ensure to do it so as you can have a password
2. On iTax page, enter your PIN then click the continue button to put in your password. Answer the simple mathematics calculation just below the password and click login in. If you input the wrong PIN the system will prompt you to retype the PIN in the correct format
3. Once you login, on the menu, select returns and choose File nil return as indicated below
4. Choose the tax obligation you wish to file a nil return and click next
5. Enter the period in which you wish to declared the nil return and click next
6. A message will pop up asking if you are sure there is no income to be declared for the said period. Confirm and then submit
Sometime the system may give you an error stating that you cannot file a nil return. If this is the case then you will need to look back note if there is any form of income gained in the period being declared. If for instance there is a time you were paid some amount of money and a withholding certificate was issued you will not be able to file a nil return. You will need to declare that income.
In case you are registered for any tax obligation in which you are not supposed to, for instance you were registered for PAYE instead of income tax, KRA requires that you file a nil return for that tax obligation then apply for waiver of interest and penalties. To avoid such error ensure you know which tax obligation you have been register under by confirming from your PIN.
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