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With tax season upon us, confusion over common rules can cost you time, money and peace of mind.
To help you avoid costly mistakes and make the most of your tax responsibilities, we’ve fact‑checked five common misconceptions against KRA’s official regulations.
Read on to separate fact from fiction, avoid surprises and stay compliant.
Myth 1: Miss the June 30 deadline and you cannot file
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KRA tax filing
Fact check: You may still file your returns after June 30.
KRA charges a penalty of 5 percent of the tax due or Sh2,000 (whichever is higher) and interest at 1 percent per month on any unpaid balance.
Tip: Submit returns before the deadline and settle any outstanding tax promptly to reduce additional interest charges.
READ ALSO: Step-by-step guide to file KRA returns using P9 Form before deadline
Myth 2: All allowances are tax‑free
Kenyans getting service at a KRA office
Fact check: Only certain daily allowances count as reimbursements.
For instance, under the Income Tax Act, the first Sh2,000 received each day as a per diem for official travel is treated purely as a reimbursement and is not taxed.
Any amount received beyond Sh2,000 per day must be accounted for and is taxable under the Act.
Likewise, under KRA’s PAYE rules: any cash benefit or facility provided by an employer that exceeds the allowable non‑cash benefit limits is treated as taxable income.
A 'benefit' is any extra thing an employer gives besides a salary, such as allowances for phone airtime, meals, car use and similar perks.
If an employer gives more than Sh5,000 in any one of these benefits in a month, the excess amount will be added to the employee's taxable pay.
Tip: Review your payslip. Any allowance beyond the exempt thresholds is treated as income.
READ ALSO: KRA deploys tool to catch shady traders filing nil returns: Everything you should know
Myth 3: You must hire a lawyer for a KRA audit
KRA headquarters at Times Tower, Nairobi
Fact check: While KRA may use legal counsel in its audit process, you do not need your own lawyer.
You may represent yourself or appoint an authorised agent. Clear, organised records are usually enough to resolve most enquiries.
Tip: Keep payslips, receipts and contracts handy. Respond promptly to any audit letters.
READ ALSO: CS Mbadi explains move to grant KRA access to Kenyans’ financial data
Myth 4: KRA cannot charge you for errors older than five years
KRA staff working on their desks.
Fact check: KRA normally looks back five years when reassessing or correcting tax returns. However, if there is evidence of fraud, willful neglect or deliberate non‑disclosure, there is no time limit and KRA can go back as far as needed to recover taxes owed.
Tip: Review past returns now. If you spot mistakes, file amended returns before KRA raises them for you.
READ ALSO: KRA deregisters over 20,000 taxpayers in new crackdown, here's why
Myth 5: If my employer deducts PAYE, I do not need to file
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KRA
Fact check: Every person with an active KRA PIN must file an annual income‑tax return by June 30, even if PAYE was fully deducted by the employer.
Tip: Always file by June 30. Even a nil return keeps you in good standing and avoids late‑filing penalties.