Filing tax returns with the KRA is required of all taxpayers, regardless of whether or not they have any taxable income or activities during the year in question. Filing nil returns is an essential requirement to maintain compliance with tax regulations.
This article will serve as a thorough guide on filing KRA nil returns, covering everything from the process to the significance of doing so.
Understanding Nil Returns
KRA Nil returns refer to the filing of tax returns when an individual does not have any taxable income or activities during a specific tax period. Filing your tax return is mandatory even if you qualify for the nil returns category to maintain compliance with KRA standards. Please do so to avoid penalties and unnecessary complications in the future.
Why File Nil Returns
Legal Compliance: Filing nil returns is a legal obligation imposed by the KRA. It demonstrates your commitment to maintaining transparency and adhering to tax regulations.
Documentation: Filing nil returns provides documented evidence of your financial activities or lack thereof. This paperwork may be required when applying for a loan, bidding on a contract, or even applying for a visa.
Avoiding Penalties: Failing to file nil returns within the stipulated timeframe can lead to penalties and fines imposed by the KRA. Timely filing of nil returns is essential to maintaining compliance and avoiding fines and penalties.
Steps to File KRA Nil Returns
- Access the iTax filing portal by visiting https://itax.kra.go.ke/KRA-Portal/.
- Log in to the iTAX portal using your PIN and password.
- Click on ‘e-Returns’ or choose ‘Returns’ from the navigation menu and select ‘File Returns’.
- Choose the appropriate Type, enter your taxpayer’s PIN, select the relevant Tax obligation, and click ‘Next’.
- Depending on the selected tax obligation, the relevant tax form will be displayed. For instance, if you chose ‘VAT’ as the tax obligation, the VAT return form will appear.
- Follow the instructions provided on the page to complete the filing process. The instructions will include links to download the tax returns form in Excel or ODS format. Download the template and save it on your computer.
- Fill in all the applicable sections of the downloaded tax returns form and save the document on your computer.
- Ensure that macros are enabled to ‘Validate’ and Zip your File.
- Go to the iTax tax return filing page and select the period for which you are filing the returns.
- Upload the zip file and agree to the terms and conditions by checking the checkbox.
- Finally, click the ‘Submit’ button to upload the returns and confirm the pop-up message asking, ‘Do you want to upload the form?’
- Upon successful filing of KRA returns, an e-return receipt will be generated, displaying the message ‘Return submitted successfully’ along with an acknowledgment number.
Nil income tax returns help the taxman identify all taxpayers that fall below the taxable income or are unemployed and earning no salary.
The minimum taxable income in Kenya is Ksh 24,001
Those who fail to submit their Nil KRA Returns by June 30, 2023, would be subject to late fees and other penalties.