What is a tax Refund?
It is a reimbursement of excess tax paid in a given period.
Who is Eligible for Individual Income Tax Refunds?
Taxpayers eligible for Income Tax refunds fall under the following categories:
Life or Education Insurance policy holders.
Insurance policy certificate and Tax deduction card (Form P9)
Home owners with Mortgage from the following financial institutions Banks, Insurance companies, Building Societies, National Housing Corporation.
Mortgage certificate and Tax deduction card (Form P9)
Persons with Disability holding an exemption certificate.
Exemption certificate and Tax deduction card (Form P9)
Taxpayers who have paid tax deducted at source (Withholding Tax) in excess of final liability
Withholding Tax Certificate and Tax deduction card (Form P9) where applicable.
Taxpayers who pays tax in error.
Relevant documents to prove tax was paid in error.
Supporting documents should be uploaded in the system and any requested additional documents scanned and sent via email to the officer processing the claim
Note: Employees can supply relevant documents to the employer to be granted insurance relief and mortgage deduction through the payroll. It’s only those cases that have not enjoyed this direct credit through their employer that may apply for refund.
How do I apply for an income tax refund?
A claim for refund must be made within five (5) years of the date the tax was paid. A decision on the application shall be communicated to the taxpayer within 90 days of receiving the application.
The claim must be filed online via iTax as follows: -
- i) Log on to https://itax.kra.go.ke/KRA-Portal/
- 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.
- iv) Attach any supporting documents.
- v) Click submit tab.
- 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”.
Note: It is important to consult the general ledger in your i-Tax profile to ensure that your employer has accounted for all PAYE deducted from your salary before you lodge your refund claim. Taxpayers are advised to confirm the availability of credits giving rise to a possible refunds before making their application.
Which documents will I require to apply for my 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.
When should I apply for a tax refund?
Immediately after filing a tax return for the respective year.
How do I know if my refund is approved?
- Upon approval of a claim, the taxpayer is automatically notified via email.
- When the funds are disbursed by Finance, the taxpayer is automatically notified through email.
- 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:
- Payment of any other tax owing, by the taxpayer under the same tax law,
- Payment of any tax owing by the taxpayer under any other tax law.
- Any remainder be refunded to the taxpayer
If I apply for a refund how long will it take to receive the refund?
Where a claim is fully supported in all aspects, it is processed within 90 days from the time of lodgment.
How do I know if my refund application is unsuccessful?
Upon rejection of a claim, the taxpayer automatically receives a rejection order via email.
Tax Refunds are Applicable under which tax laws
- i) Income Tax Act Cap 470 (ITA) - Sections 15(3)(b), 29,30,31, 106 and the Third and Fourth Schedule.
- ii) Tax Procedures Act ,2015 (TPA) - Sections 47, 48 & 88, 97(b), 104(3), 108
- 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?
- 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.
- If the amount of repaid by the due date in the demand letter, it shall attract a late payment interest.
What are the 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: -
- 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.
- A person who knowingly claims a refund which he/she is not entitled to commits 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.