Installment Tax in Kenya. Instalment tax is estimated income tax paid to KRA periodically, four times a year to cover the total tax payable for the year of income. Instalment tax is administered under the Income Tax Act Cap 470, laws of Kenya.
What is Instalment Tax?
This is tax paid by individuals taxpayers who have a tax liability, that is not fully covered under PAYE, of over Kshs. 40,000 payable for any year.
The instalments are spread evenly at 25% of the tax due and payable on the 20th day of the 4th, 6th, 9th and 12th months of the year of income for all taxpayers expect those in the Agricultural Sector.
Taxpayers in the Agricultural Sector pay in instalments of 75% in the 9th month and 25% in the 12th month.
Meaning of Instalment Tax in Kenya?
Instalment tax is estimated income taxes paid to KRA periodically, to cover the total tax payable for the year of income. Installment tax is administered under the Income Tax Act Cap 470, laws of Kenya.
Who is eligible for InstalmentTax?
If the annual tax liability is projected to exceed Kshs. 40,000, then you should pay your tax in installments.
When do I project the tax liability for the year?
Projection is normally done at the beginning of the financial year. While projecting the annual tax liability, the expected withholding tax for the year needs to be netted off to arrive at the net estimated tax liability.
How do I structure the tax in instalments?
The Income Tax for the current year is paid on instalment basis as below;
- 1st Instalment – by 20th of the fourth month
- 2nd Instalment – by 20th of the sixth month
- 3rd Instalment – by 20th of the ninth month
- 4th Instalment – by 20th of the twelfth month
NB: Balance of Tax (return balance) to be paid by end of the 4th month after the year-end. i.e. by 30th April 2020 for December year-end cases.
However, taxpayers in the Agricultural Sector pay in instalments as follows;
- 1st Instalment – 75% in the 9th month
- 2nd Instalment – 25% in the 12th month.
How do I pay Instalment Tax?
Instalment tax is paid via iTax. Generate a payment slip and present it together with the cheque drawn in favor of Kenya Revenue Authority, at any of the KRA appointed banks.
Is there a penalty for late payment?
Penalty for the late payment of income tax shall apply.
How do I pay Instalment-Taxes?
Instalment tax is paid via iTax.
Generate a payment slip and present it, with the due tax, at any of the KRA appointed banks.
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