How to claim an income tax refund from KRA

When it comes to income tax, it's important to ensure that you pay the correct amount based on your earnings and deductions.

However, there are instances where individuals or businesses may end up paying more tax than they owe.

In such cases, it's essential to understand how to claim an income tax refund from the Kenya Revenue Authority (KRA).

Who is Eligible for Individual Income Tax Refunds?

Life or education insurance policy holders - Individuals who hold life or education insurance policies are required to provide certain documents when it comes to tax-related matters.

These individuals need to possess an insurance policy certificate and a tax deduction card, commonly known as Form P9.

These documents are essential for the proper reporting and deduction of taxes related to the insurance policies held by the individuals. The insurance policy certificate serves as proof of coverage and outlines the terms and conditions of the policy.

READ: Ruto lectures KRA officers while filing annual tax returns

Homeowners with mortgage from financial institutions - Homeowners who have obtained mortgages from various financial institutions such as banks, insurance companies, building societies, or the national housing corporation are also required to provide specific documents for tax purposes.

These individuals need to possess a mortgage certificate and a tax deduction card (Form P9). The mortgage certificate serves as proof of the mortgage agreement between the homeowner and the financial institution.

Persons with disabilities holding an exemption certificate - Individuals who have a disability and hold an exemption certificate are required to provide specific documents for tax purposes.

These individuals need to possess an exemption certificate and a tax deduction card, commonly known as Form P9.

These documents are essential for accurately reporting their tax liabilities and claiming any applicable exemptions or deductions.

Taxpayers who have paid tax deducted at source (Withholding Tax) in excess of final liability - In certain cases, taxpayers may find themselves in a situation where they have paid an amount of tax that exceeds their final tax liability.

For individuals in this situation, it is important to claim a refund of the excess tax paid. To initiate the refund process, taxpayers are required to provide specific documentation.

This includes a withholding tax certificate, which serves as proof of the tax amount that has been deducted at the source.

The certificate is typically issued by the entity responsible for withholding the tax, such as an employer or a business partner.

This can occur when taxes are withheld at the source, such as through employment income or business transactions.

READ: KRA granted access to Kenyans' secret bank accounts in new law

Taxpayers who pay tax in error - In certain situations, taxpayers may inadvertently pay taxes that were not actually owed.

This can occur due to various reasons, such as miscalculations, misunderstandings, or administrative errors.

When taxpayers find themselves in such a predicament, it is crucial to rectify the situation and claim a refund for the tax paid in error.

To initiate the process of claiming a refund, taxpayers will need to provide relevant documents that prove the tax was indeed paid in error.

These documents serve as evidence and help substantiate the taxpayer's claim. The specific documentation required may vary depending on the circumstances and the tax authorities' regulations.

How to apply for an income tax refund

1. i) Log on to https://itax.kra.go.ke/KRA-Portal/
2. ii) Click the Refund tab. From the drop down menu, select Income Tax.

• iii) Click Claim Details Tab and fill the fields available. All fields with * are mandatory.

1. iv) Attach any supporting documents.
2. v) Click submit tab.
3. vi) The claim is automatically allocated to a refunds officer and an Acknowledgement Number generated and sent to the taxpayers through email. This number is used to track the claim.

• vii) The taxpayer may track the status of the claim by selecting “Track status of Application” under “Useful Links”.

Documents required to apply for refund

• Tax deduction card (Form P.9) for claims relating to excess PAYE deductions
• Insurance policy certificates for claims relating to insurance relief
• Mortgage certificate from a financial institution for claims relating to interest on mortgage or home ownership plan
• Withholding tax certificates for claims relating to tax deducted at source.

Tax refunds should be applied immediately after filing a tax return for the respective year.

How to know that your refund has been approved

1. Upon approval of a claim, the taxpayer is automatically notified via email.
2. When the funds are disbursed by Finance, the taxpayer is automatically notified through email.
3. Where claim is supported in all aspects, it is expected be paid within two (2) years from the date the application was lodged. Any amount remaining unpaid after two years will attract an interest of 1% per month or part thereof.

Please note that in line with Section 47(4) of the Tax Procedures Act, the refund shall be applied in the following order:

1. Payment of any other tax owing, by the taxpayer under the same tax law,
2. Payment of any tax owing by the taxpayer under any other tax law.
3. Any remainder be refunded to the taxpayer

Where a claim is fully supported in all aspects, it is processed within 90 days from the time of lodgment.

Upon rejection of a claim, the taxpayer automatically receives a rejection order via email.

Applicable law

1. i) Income Tax Act Cap 470 (ITA) - Sections 15(3)(b), 29,30,31, 106 and the Third and Fourth Schedule.
2. ii) Tax Procedures Act, 2015 (TPA) - Sections 47, 48 & 88, 97(b), 104(3), 108
3. iii) Legal Notice No. 36 of 2010 – The Persons with Disabilities (Income Tax Deductions and Exemptions) Order, 2010

What happens in an instance where a taxpayer is erroneously refunded?

1. Where the Commissioner refunds a person in error, that person shall be required to repay the amount erroneously refunded by the date set in the letter of demand.
2. If the amount of repaid by the due date in the demand letter, it shall attract a late payment interest.

Administrative Penalties & Offences for Making Fraudulent Claims

According to Section 88, 97(b) & 104(3) of the Tax Procedures Act,

A person who makes a fraudulent claim shall be liable to either a penalty or prosecution as follows: -

1. A person who fraudulently makes a refund claim shall be liable to a penalty of an amount equal to two times the amount of the claim.
2. A person who knowingly claims a refund which he/she is not entitled to commit an offence and is liable, upon conviction, to a fine not exceeding ten million shillings and/or imprisonment for a term not more than ten years.